Zacks Investment Research upgraded shares of JAKKS Pacific Inc. (JAKK) from UNDERPERFORM to NEUTRAL on December 03, 2012, with a target price of $13.00.
Jakks Pacific cut its fiscal guidance prior to the third-quarter earnings owing to a tough retail environment. Additionally, decelerating margins, top- and bottom-line miss in the third quarter of 2012, unfavorable product mix and wage inflation in China add further worry. The uncertainty around the looming fiscal cliff in the U.S. along with global economic turmoil due to the Eurozone crisis will likely keep consumers preoccupied and less inclined towards entertainment activities. However, with strong product launches, possible acquisitions, strategic partnerships, resolution of litigation and finances, Jakks Pacific is well poised for long-term growth. Also, we believe, much of the bearish thesis is reflected at the current price. The ongoing fourth quarter is also seasonally stronger for the retailers due to holiday season. Hence, we upgrade the recommendation from Underperform to Neutral.
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