Hasbro Inc., the renowned toy and game maker, has recently projected a decline in sales for this year due to the ongoing strike in Hollywood. However, analysts at BofA anticipate a surge in profit for Hasbro next year as games like Monopoly Go and Baldur’s Gate 3 gain popularity.
Hasbro’s Strong Intellectual Property and Licensing Potential
In an analysis note on Tuesday, BofA analysts Jason Haas and Elizabeth Suzuki highlighted the vast intellectual property portfolio at Hasbro’s disposal. As the convergence of toymaking and filmmaking increasingly relies on repurposing characters from well-established franchises, Hasbro possesses an extensive library that includes Transformers, Power Rangers, GI Joe, My Little Pony, and many more. The analysts believe that investors may not fully appreciate Hasbro’s potential to generate high-margin licensing revenue from this strong IP foundation.
Success of Recent Game Launches
Furthermore, the BofA analysts expressed encouragement regarding the positive performance of two recent digital game releases: Monopoly Go and Baldur’s Gate 3. These games have not only garnered a favorable response from players but have also contributed to royalty revenue for Hasbro.
Monopoly Go: A Modern Twist on a Classic Board Game
Monopoly Go, developed by an external company, combines digital and casino elements while introducing new settings to the beloved classic board game. This fresh take aims to captivate audiences and breathe new life into the iconic Monopoly experience.
Baldur’s Gate 3: An Exciting Role-Playing Video Game
Baldur’s Gate 3, developed by Larian Studios, is an immersive role-playing video game that draws upon game-play mechanics from the legendary Dungeons & Dragons franchise—a property that falls under Hasbro’s ownership. The game’s compelling narrative and engaging gameplay have resonated with both new and long-time fans, contributing to Hasbro’s revenue through royalty earnings.
In conclusion, despite the challenges posed by the Hollywood strike, Hasbro remains well-positioned to capitalize on its intellectual property and generate substantial licensing revenue. The recent success of Monopoly Go and Baldur’s Gate 3 serves as a testament to the company’s ability to create compelling entertainment experiences. As Hasbro continues to innovate and adapt, its prospects for profitability in the coming years appear promising.
Potential Revenue Boost for Hasbro
The anticipated success of Monopoly Go and Baldur’s Gate 3 could potentially yield substantial revenue for Hasbro, according to analysts. If Monopoly Go manages to achieve $500 million in sales within its first year, it could contribute an impressive $60 million in revenue to Hasbro. This would result in an additional 33 cents per share in earnings for the company, predominantly in 2024.
Similarly, if Baldur’s Gate 3 is able to sell 10 million units, analysts predict that it would generate approximately $61 million in revenue for Hasbro. This could translate to an extra 34 cents per share in earnings throughout this year and the next.
Current data from Appfigures indicates that Monopoly Go has already reached $200 million in sales since its launch in mid-April. On the other hand, Baldur’s Gate 3 has sold 2.5 million units prior to its release on PC on August 3rd.
Considering these impressive prospects, Bank of America analysts have raised their price target for Hasbro from $85 to $90. Furthermore, they have increased their estimated earnings per share for 2024 from $4.80 to $5.
These positive developments have already begun to reflect in Hasbro’s stock performance. On Tuesday, the company’s shares experienced a significant rally of 7.3%. Year-to-date, the stock has seen an overall increase of 9.5%.
It is worth noting that toy demand experienced a decline last year due to the resurgence of travel and entertainment. Additionally, rising prices compelled people to focus on essential purchases. In response, Hasbro underwent a reevaluation and narrowed its focus to concentrate on its core toys and games. As part of this strategic shift, the company recently announced the sale of its eOne film and TV business to Lionsgate for a substantial sum of approximately $500 million.
