DA Davidson downgraded Hasbro to Neutral from Buy with a price target of $53, down from $60. The analyst cites valuation for the downgrade with the shares up 20% in two months and also cut the firm’s below-consensus estimates. Signals point to management uncertainty about when the toy business will resume growth, and Wizards & Digital Gaming has a hard compare in 2024 due to Baldur’s Gate 3, the analyst tells investors in a research note. Davidson estimates 2023 could be the second year that Hasbro’s free cash flow does not cover dividends of $400M, and that the company’s debt-to-EBITDA target of 2.5-times is unlikely to be achieved until after 2025 unless the dividend is cut.
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