Some good news . . . relatively speaking

The notion of good news seems a bit extreme right now. A bit like snow on Mars. Hey, wait, it actually did snow on Mars this week and there really is some good news for the toy industry… relatively speaking.

Gerrick Johnson, a financial analyst specializing in the toy industry for BMO Capital, upgraded Jakk’s Pacific "Outperform" from "Market Perform" and raised the price target to $32 from $28. That’s according to a CNBC article “Ahead of the Bell: Jakks Pacific upgraded.” Johnson sited the dismissal of the WWF lawsuit (that’s good news) as well as "”…a strong product portfolio, and potential for acquisition.” In addition, Johnson is looking at a 3% decline in sales this year, and when you consider how this year is shaping up, it could be a whole lot worse. 

And here’s a strange one for you. According to Drew Crum, a CPA and expert on the toy industry with Stifel-Nicolaus: “…”The U.S. Department of Labor inflation on toys declined -5.2% y/y for the month of August – seems counter-intuitive to us based on more aggressive pricing being taken by toy manufacturers in our coverage universe.” Price deflation on toys. Go figure!

So, toy stocks are looking up, industry revenue projections are for a loss but not a big one, and the retail price of toys at retail has actually declined from last year. Could be worse! Believe me, it could be worse.