Ahead of the bell: Jakks Pacific downgraded
NEW YORK (AP) — The holidays might not be so merry for Jakks Pacific, which earned an analyst downgrade after cutting its guidance for the year.
Shares slid $1.48, or 10 percent, to $13.09 in premarket trading Monday.
Late Friday, the maker of toys including Cabbage Patch Kids and Ultimate Fighting Championship action figures cut its outlook due to weak sales in the U.S. and a slowdown in orders, along with higher marketing and advertising expenses.
It now expects net income, excluding one-time items, of 68 cents to 74 cents per share on revenue of $690 million to $700 million for the year. Previously, the company expected net income of $1.04 to $1.08 per share on revenue of $720 million to $728 million.
Analysts expect net income of 79 cents per share on revenue of $696 million, according to FactSet.
If Jakks doesn't achieve the high end of its guidance, 74 cents per share, it will take a charge of $82 million, or $3.45 per share, on its deferred tax assets — the company's expected tax deductions in future years.
The guidance cut led KeyBanc Capital Markets analyst Scott Hamann to downgrade the Malibu, Calif.-based toy company to "Hold" from "Buy," saying there is little chance that shares will rise during the upcoming holiday season. He lowered his earnings estimate for the year to 70 cents per share from $1.15 per share.
Meanwhile, BMO Capital Markets analyst Gerrick Johnson noted that it is the second holiday in a row that the company has significantly cut its guidance before the holidays. He speculated the cut is due to poor performance of Jakks' new Monsuno boys action figure line.
He lowered his 2012 estimate to 65 cents from $1.05 and cut his target price to $12 from $16. He kept his "Market Perform" rating on the stock.
Shares are up about 3 percent for the year, and have risen 10 percent from a 52-week low on Jan. 11 of $13.29 to close at $14.57 Friday.