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Saw this analyst "downgrade" of Hasbro which I thought was interesting, because she blames the toy industry environment rather than anything specific at Hasbro. It is true that Toys'R'Us has been hurting recently, hasn't it? Seem to recall that big name have-it-all stores like Wal-Mart are eating into the toy sales Toys'R'Us usually sees. Though should it matter that much *where* Hasbro sells its toys as long as they sell???

It's also funny because one might expect that when a competitor begins to slump (such as Mattel), that the leader would be given more favor. Whereas here, the competition's troubles are seen as reflecting on the "difficult industry climate." No one ever claimed there was logic involved here.


Krutick downgraded Hasbro to an "outperform" from "buy" based on slowing momentum, tough 2000 comparisons and what she called a difficult industry climate. Hasbro shares responded with a tumble of 1 3/4, or 7.9 percent, to 20 5/16.

"Tight retail inventories, cannibalization from video games, a mixed international scene, competitive licensing market and turmoil at Toys 'R' Us (TOY: news, msgs) is a tough setting," Krutick said, adding that she saw limited upside potential for "Star Wars" toys and possible rising competition for Pokemon cards.

Krutick cut her 2000 earnings-per-share estimate to $1.58 from $1.70 a share to reflect a more subdued industry backdrop and less hot-toy momentum. Krutick also sliced her $37 price target to $26.

As for Mattel, Krutick advised maintaining caution "on this volatile situation" after the toymaker pre-announced a huge third-quarter shortfall that was "significantly worse than our worst-case scenario."
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