Hasbro (NASDAQ:HAS) was lifted to Neutral from Underperform by BofA analysts, who raised the price target on the stock to $63 from $42 in a note to clients Friday.
The analysts told investors in a note that results show resilient demand for the company's "Magic: The Gathering" game sets.
Hasbro reported earnings before the open on Thursday, topping profit and revenue expectations with guidance also above analyst consensus estimates.
"We'd downgraded Hasbro on 11/14/22 (see report) given our concern that the company overprinted its Magic: The Gathering cards," the analysts recalled. "While the overprinting upset many players and collectors, it hasn't had a discernable impact on demand. Magic revenue grew 14% in 1Q ex. FX vs. our +2% estimate. This was driven by strong demand for Phyrexia, back catalog sales of Modern Horizons 2, and Warhammer 40K which is on its fourth reprint; but the secondary market prices of these sets remain robust."
BofA believes the company's guidance for up mid-single digit Wizards segment revenue in 2023 is achievable, "especially given excitement for Lord of the Rings and Commander Masters Magic sets and Baldur's Gate III."
"Wizards' 1Q EBITDA margin of 29% missed our 40% estimate, but this was driven by marketing, investment, and product costs, not discounting," they concluded.