We are reiterating our Buy rating, projections and $40 price target for JAKKS Pacific with the company announcing 2Q25 (June) results after the close on Thursday. We believe China tariffs at 100%+ levels for much of April served to effectively shut down shipments of JAKK product in the beginning of 2Q. Further, the company's Freight On Board ("FOB") driven business model also served to create a slower return to shipping when the 30% China tariff went into effect on May 12th. That said, June is historically the biggest month for the company in 2Q, as Halloween goods are shipped to be ready for the season and Xmas shipments also begins. Taking all these pieces into account, we believe visibility into 2Q is extremely limited, and the quarters finical results will prove almost irrelevant for projection purposes. More importantly, the 2Q conference call will give investors a glimpse of how JAKKS Pacific is managing the world of 30% China tariffs to maximize returns and ensure the Grinch does not ruin Xmas (for investors and JAKKS Pacific). We believe the company's management team has the financial strength and expertise to create a new winning formula and increase overall market share, and, as such, are reiterating our Buy rating and $40 price target for JAKK.
