Can Paw Patrol Save Spin Master? At Least One Analyst Thinks So

  • Stock weakness is a buying opportunity, Raymond James says
  • Toys ‘R’ Us shutdown only seen as ‘modestly disruptive’

The Paw Patrol Air Patroller toy.

Photographer: Jonathan Brady/AP/PA Wire

Investors toying with the idea of dumping Spin Master Corp. stock on some bad news about one of its biggest customers may want to think again.

Shares of the Canadian toymaker are under pressure after Toys ‘R’ Us was said to liquidate its bankrupt U.S. operations, sending other toy stocks like Mattel Inc. and Hasbro Inc. reeling.

Spin Master has some of the “hottest” toys in the business, Raymond James analyst Kenric Tyghe wrote in research note following the news. “While potential liquidation sales could be modestly disruptive for a period of time in 2018, we believe that it is important to remember that a single (albeit large) retailer going out of business will not shrink the market, given that parents will continue to buy at a very similar pace given that neither the number of special events nor children are decreasing."

Any stock weakness is a buying opportunity, he added.

One of the company’s prized possessions is Paw Patrol, whose sales drop in the fourth quarter had other analysts worried. The company says the decline was primarily on a revenue shift into the first quarter.

Revenue growth is one thing the company has had plenty of. Annual growth in the last four years has towered over its peers, although actual sales in dollars still stand at about a third of both Mattel and Hasbro.

Spin Master shares fell as much as 5.2 percent on Friday, the most since November 8.

Master of Puppets

Spin Master's annual revenue growth dwarfs that of toymaker peers

Source: Bloomberg

— With assistance by Tom Lagerman

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