DA Davidson lowers Hasbro earnings outlook on negative cost leverage

DA Davidson analyst Linda Bolton Weiser keeps a Buy rating and $80 price target on Hasbro (HAS) but cuts the firm’s Q1 EPS view to (10c) from 20c. The Street might not have accurately reflected the negative fixed cost leverage in Q1, and based on historical seasonality trends and the fact that incentive compensation expense was depressed in Q4, Hasbro’s SD&A expense in Q1 could be flattish with Q4 in dollars, the analyst tells investors in a research note. The firm further speculates that while Hasbro’s previous attempt to combine with Mattel (MAT) did not materialize on fear of regulatory scrutiny, today "things are a bit different" as these are "more global companies". DA Davidson added that if Disney (DIS) is allowed to get stronger and stronger through acquisitions like Marvel and Lucasfilm, it would seem fair that Mattel and Hasbro should be allowed to combine their IP.