We are reiterating our Buy rating and $30 price target for JAKKS Pacific ahead of 4Q25 (December) results but are taking a slightly more cautious gross margin view for the quarter after Mattel and Hasbro announced disappointing 4Q results, especially on the margin side. That said, we note JAKKS, unlike their larger brethren, remained highly conservative in their 4Q focus, continuing to emphasize the international segment and their Freight on Board (“FOB”) model, which does not provide for material 4Q shipments and/or the creation of a large stock of inventory (especially on the domestic front) to meet potential Holiday toy demand. As such, 4Q is not a highly relevant quarter for the company (historically the company registers a loss per share in 4Q) or a harbinger for the next year. We believe there remain, as the tariff shocks abate, opportunities for positives in 2026 and, with JAKK trading at 6X our 2026 EPS, the risk/reward remains positive; we reiterate our Buy rating and $30 price target for JAKK.
