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JAKKS Pacific (JAKK) Raised to Buy: What’s Driving the Stock?


On Sep 20, 2016, Zacks Investment Research upgraded the multi-brand toy and consumer products company, JAKKS Pacific, Inc. JAKK by a notch to a Zacks Rank #2 (Buy).

The company’s top- and bottom-line results beat the Zacks Consensus Estimate in second-quarter 2016, and marked the third consecutive second quarter of year-over-year growth in earnings and revenues.

Notably, over the past few quarters, JAKKS Pacific’s revenue growth has been mainly supported by sales of products such as the BIG-FIGS featuring Star Wars and Batman vs. Superman, Warcraft figures, collectible figurines line Tsum Tsum, Disguise Halloween costume, and Nintendo figures and plush.

Moreover, in the second half of 2016, JAKKS Pacific is set to launch numerous products across a number of categories like magical dolls, mini-collectibles and radio controlled vehicles. Such a strong line-up of on-trend and appealing products is further expected to boost sales.

Further, associations with popular brands and licensing agreements with well-liked movie and television franchises should continue aiding top-line growth.

Moreover, this Halloween, JAKKS Pacific is set to launch LEGO-based costumes, WWE costumes and accessories along with a broad line of Halloween products from Disney Princess and Frozen and characters from the movie Finding Dory. Given the extensive catalogue of costumes, the company is confident of having a terrific Halloween season, which should boost sales.

Meanwhile, the company also remains committed to diversifying its footprint outside the U.S. It currently operates in 65 countries, and has recently opened sales offices and expanded distribution agreements for its products in Germany and Mexico. These initiatives are likely to strengthen the company’s international presence and broaden its customer base.

JAKKS PACIFIC Price and Consensus

JAKKS Pacific is currently trading at a P/E multiple of 10.94x for 2016, less than the industry average of 23.92x and significantly lesser than other key players like Activision Blizzard, Inc. ATVI and Electronic Arts, Inc. EA, among others.

Another stock worth a look in this sector is Take-Two Interactive Software, Inc. TTWO, with a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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