The naming of a new chief executive by Toronto-based toymaker Spin Master on Monday was a move that will help the company leverage its digital and entertainment assets more effectively, according to an analyst from Jefferies.
“I really like this move because one of the biggest (pieces) of feedback that we get on this stock is just really that the valuation has compressed quite a bit since its initial public offering (IPO) in 2015,” Kylie Cohu told BNN Bloomberg in a Tuesday interview.
“When it IPOd it was actually trading at a premium to, say, a Mattel or Hasbro because they had these other creative centres… since then, however, the narrative has really shifted, and it’s really become hyper-focused on that toys or consumer products vertical.”
Spin Master’s two other main business segments aside from toys are entertainment, centred around the popular children’s TV show Paw Patrol, and digital gaming. The company’s newly appointed CEO Christina Miller is likely to bring those to the forefront again, Cohu said.
“I think Miller will be able to kind of refocus investors’ attention and also the company’s attention on creating value in those spaces,” she said.
Miller, already a Spin Master board member, will officially assume the company’s top job on July 7, replacing current CEO Max Rangel. Miller previously served as president of WarnerMedia’s kids, young adults and classic division.
Her background in entertainment is a shift in expertise away from Rangel’s, who has spent his career mainly in the consumer packaged-goods space, Cohu noted.
“Overall, (Rangel) has done a really good job of doing what he’s very good at, and he came from the consumer-packaging world… (he) really was able to take the operations, take the logistics, and be able to kind of right-size that toy business,” she said.
“I think he did a good job of doing what he was brought in to do. What the company needs to do now is kind of expand its purview and really focus on those other verticals as well.”
Spin Master’s TSX-listed shares, which are down more than 30 per cent since the start of this year, were slightly higher in early afternoon trading on Tuesday, at $23.39.
