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What’s Driving Hasbro Stock?

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Oct. 16 2018, Updated 9:02 a.m. ET

Hasbro stock rose 8.2%

YTD (year-to-date), Hasbro (HAS) stock has risen 8.2% to $98.31 as of October 12. In comparison, Mattel (MAT) and Jakks Pacific (JAKK) stocks have fallen 6.8% and 0.4%, respectively. Take-Two Interactive Software (TTWO) stock has risen 17.6%. The S&P 500 Index’s YTD gain is 3.5%.

Hasbro has been developing product lines inspired by recent movies, including Deadpool Venom and the upcoming Spider-Man: Into the Spider-Verse. These products are expected to add to the company’s top-line growth.

Hasbro has signed a deal with Epic Games and plans to launch Nerf and Monopoly experiences inspired by the popular Fortnite game. It launched the Monopoly: Fortnite Edition Board Game a few days ago and plans to launch Nerf Fortnite blasters in 2019.

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Hasbro is focused on innovation to compete for kids’ attention. It has quite a few products in the pipeline for the holiday season. They include its Monopoly, Nerf, Transformers, Disney Princess, and Baby Alive franchise brands. The Power Rangers acquisition is likely to emerge as a major growth catalyst.

Near-term headwinds

Toymakers are experiencing troubled times as kids’ preferences shift to video games and digital-based toys. As a result, the demand for traditional toys has been hit hard. The expansion of e-commerce retailers is contributing to the challenging environment for toy manufacturing companies.

Hasbro and other toymakers across the United States have been left in the lurch due to the dissolution of Toys “R” Us. Its inventory management troubles in Europe have also added to its concerns. Given all these factors, Hasbro’s third-quarter revenue is expected to fall 4.3% year-over-year.

Hasbro’s CEO Brian Goldner said during the second-quarter earnings call that although the company can’t recapture the lost revenue from the Toys “R” Us liquidation by 2018, it should no longer be negatively affected by the liquidation by 2019.

In Europe, Hasbro is working on developing omnichannel capabilities to contain the threat from growing online retailers. It expects Europe’s woes to negatively impact its gross margin in fiscal 2018.

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