On Thursday, DA Davidson reaffirmed its positive stance on Funko (NASDAQ:FNKO) shares, maintaining a Buy rating and a $16.00 price target.
The endorsement follows a review of recent Bloomberg data that showed a significant increase in the company's debit and credit card sales during the fourth quarter of 2024.
The analyst pointed out that Funko's direct-to-consumer (DTC) sales, which represent 20%-25% of total sales, surged by 33% in Q4 2024. This growth is seen as a potential indicator of the overall performance for the quarter. The data suggests that a considerable portion of these sales, 47%, occurred in the four weeks leading up to December 22, 2024, with weekly year-over-year growth ranging from 15% to an impressive 216%.
These figures have bolstered DA Davidson's confidence in Funko's ability to exceed market expectations for the fourth quarter of 2024. The analyst believes that this momentum could be pivotal in determining the extent of the potential beat. Looking ahead, there is an anticipation that Funko could resume its full-year sales growth in 2025. However, the analyst expressed a preference for a more conservative market consensus, slightly lower than the current +8% expectation.
The $16 price target set by DA Davidson is derived from a multiple of 23 times the firm's estimated earnings per share of $0.70 for the year 2026. This valuation reflects a forward-looking assessment of Funko's financial prospects and the anticipated earnings growth over the next couple of years.
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