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Stifel: Funko's Q1 Impresses Despite Toys R Us Liquidation

Elizabeth Balboa

The Street was unimpressed by Funko Inc (NASDAQ: FNKO)’s sturdy first quarter. The stock plunged 7.8 percent in spite of top- and bottom-line beats, but Stifel came to the company’s defense.

The Rating

Analyst Drew Crum maintained a Buy rating on Funko with an $11 price target.

The Thesis

Citing growth in "Avengers," "Star Wars," "Rick & Morty" and Pop! vinyl sales, Crum said Funko exceeded Stifel's estimates in both revenue and earnings before interest, taxes, depreciation and amortization.

“The upside was partly due to a ‘pull-forward’ of shipments ahead of planned investment spending in Europe; this was anticipated and provided an estimated $3 million-$5 million benefit,” Crum said in a Friday note.

“ ... Even without this, overall the company fared far better (relative to toy manufacturers) amid the Toys R Us liquidation.”

Adjusted gross margins spiked 210 basis points year-over-year in spite of $1.8 million in Toys R Us-related charges, and Stifel regards Funko’s reaffirmed guidance a “modest upgrade” considering it reflects such growth-offsetting charges.

View more earnings on FNKO

“Overall we thought this was a solid start to '18, marking the third consecutive quarter (and as a public company) Funko has met/exceeded Street numbers, which should build further confidence around the business, in our opinion." 

Price Action

Funko shares were up 1.63 percent at $9.68 at the time of publication Friday. 

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Latest Ratings for FNKO

Date Firm Action From To
Dec 2017 BMO Capital Downgrades Outperform Market Perform
Nov 2017 Bank of America Initiates Coverage On Buy
Nov 2017 Goldman Sachs Initiates Coverage On Buy

View More Analyst Ratings for FNKO
View the Latest Analyst Ratings

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