Bank of America upgraded Hasbro (NASDAQ: HAS) to Buy and increased the price target to $80 from $70 on Friday, citing accelerating digital growth and a recovering physical play business.

"We do not believe consensus forecasts are fully accounting for the success of HAS' digital gaming strategy with Monopoly Go!" says BofA. They expect the game to significantly boost profitability, contributing ~$36 million in operating profit per quarter in the second half of 2024.

BofA also sees positive signs in the company's consumer products division. "We now see healthy overall toy industry inventory levels," they report, adding that "HAS management said that April sell-through was positive."

While BofA predicts an 18% revenue decline in Q2 due to factors including reduced SKUs and tough comparisons, they anticipate improvement in the second half with new product launches.

The Magic business is expected to remain stable despite potential player fatigue. "Store managers and players see traditional games remaining popular," says BofA, "and believe there is excitement on the Modern Horizons 3 release."

Looking ahead, BofA expects Hasbro's momentum to continue into 2025, fueled by a full year of royalties from Monopoly Go!, a potential return to low-single-digit growth in consumer products, and a more favorable theatrical content slate.

BofA's $80 price target represents a significant premium to other leisure companies, reflecting their belief in Hasbro's higher margins and EPS growth potential.

By Sam Boughedda