Analyst Note| Jaime M. Katz, CFA |
We plan to raise our CAD 33 fair value estimate for Spin Master by a high-single-digit rate after incorporating second-quarter financial results that included gross product sales that rose 27%, to $359 million, and entertainment and digital (16% of mix) sales growth of 126%. That said, we view the shares as rich, trading at more than 30 times our 2022 EPS estimate. Spin Master held its 2021 outlook for high-single-digit gross product sales growth, implying a slowdown from the first half’s 25% to about flat year over year in the second half. However, given the strong showing in digital, the firm increased its total revenue growth outlook to the midteens (from the low double digits prior). As such, we plan to lift our 12% total sales growth forecast by raising our entertainment and digital sales growth estimate above 50%.