) to neutral from outperform. Yesterday, the toy maker posted fourth-quarter EPS (GAAP) of 42 cents, vs. 31 cents a year ago.
Analyst Scott Barry says he sees increased risk as restructuring benefits may no longer offset systemic revenue and cost variability inherent in the toy category. He notes cost pressures, increasing domestic channel concentration, escalating seasonality, and tough international and entertainment segment comps increase the near term EPS risk. He says margin benefits from process reengineering, global realignment, and tighter supply chain will likely be more muted.
Barry raised his EPS estimate for 2003 from $1.18 to $1.23, and set a $1.34 2004 EPS forecast.