We are reiterating our Buy rating and $30 price target for JAKKS Pacific after the company reported 3Q25 (September) results even worse than our "doomsday" scenario, as domestic revenue fell 40%, driven by uncertainty over tariffs and push back and cancelation of Freight on Board ("FOB") orders for the start of the Holiday season. While JAKKS management once again did a strong job of controlling expenses, it was not enough against a 34% YoY revenue decline. Further, management reiterated their decision to remain focused on the FOB model and to not take material inventory risks in 4Q. That said, the company remains in strong financial position, with $2.43 per share in cash and no debt and limited domestic inventory exposure. Further, management is beginning to see multiple licensing opportunities for 2026 as weaker toy players begin to pull back. Given the current uncertainty, we see no reason to be aggressive in our JAKK projections, and are reducing our revenue projections for 4Q25 and 2026 further and slightly trimming our 2026 EPS to $3.00. We believe 3Q25 will prove to be the nadir for the company and reiterate our Buy rating and $30 price target for JAKK.
