Jakks Pacific Inc.'s share price is likely to reach $20 within the next year, 26 percent above its current level, as the maker of licensed toys, furniture and apparel introduces a slew of new products, Barron's said in its July 16 edition.
That price target is equal to what private equity firm Oaktree Capital Management had offered to pay for Jakks in an unsolicited takeover bid last September. Talks on a possible acquisition broke down last month.
According to the newspaper, Jakks has an enterprise value, or market value plus net debt, of 4.9 times EBITDA -- earnings before interest, taxes, depreciation and amortization -- well below the eight multiple at other toy companies.
It said that if Jakks were to fetch a "more deserved" seven multiple, its shares could trade at $25, or 58 percent above Friday's closing price of $15.85.
Jakks makes products under licensing agreements with Walt Disney Co., Cabbage Patch Kids, Graco, Hello Kitty, Pokemon and other brands that appeal to children.
Wal-Mart Stores Inc., Target Corp. and Toys "R" Us, Jakks' three largest customers, accounted for a respective 24.6 percent, 19.4 percent and 12.6 percent of net sales last year.
Earlier this year, Jakks launched the Monsuno toy line, based on the Nicktoons animated series that began in February.
By year's end, it is also expected to have launched ranges of superhero figures based on the hit films "The Avengers" and "The Amazing Spider-Man," and the upcoming "The Dark Knight Rises" based on DC Comics' Batman.
According to the newspaper, Jakks has a healthy balance sheet, with $175 million of cash and $92 million of debt, or a net cash position of $3.81 per share.
Second-quarter results are scheduled to be released on July 17.
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