Equity Research Focusing on the Consumer Sector, Small Cap Consumer Research

Small Cap Consumer Research

Equity Research Focusing on the Consumer Sector

Small Cap Consumer Research, LLC is a leading company-sponsored equity research provider focusing on the consumer sector (apparel, brand licensing and specialty retailing segments).

Equity Bottom-Up

<ul><li>We are reiterating our Buy rating, projections and $50 price target for Build-A=Bear Workshop after visiting company stores and shop in shop in London.</li><li> We believe the company’s United Kingdom operations remain focused on driving solid top and bottom line results, with an emphasis on continuing to expand the tourist trade and store expansion on Build-A-Bear’s terms, which includes a focus on rental costs, the ability to drive top line growth and the potential to capture market share.</li><li> As such, we remain impressed with Build-A-Bear’s ability to drive high-margin full price selling in key tourist driven arenas, and reiterate our Buy rating and $50 price target for BBW.</li></ul>

We are reiterating our Buy rating, projections and $50 price target for Build-A=Bear Workshop after visiting company stores and shop in shop in London. We believe the company’s United Kingdom operations remain focused on driving solid top and bottom line results, with an emphasis on continuing to expand the tourist trade and store expansion on Build-A-Bear’s terms, which includes a focus on rental costs, the ability to drive top line growth and the potential to capture market share. As such, we remain impressed with Build-A-Bear’s ability to drive high-margin full price selling in key tourist driven arenas, and reiterate our Buy rating and $50 price target for BBW.

BBW: Snapping the Store – London: Driving Profitable Growth; Reiterate Buy, $50 PT

<ul><li>We are reiterating our Buy rating, projections and $30 price target for JAKKS Pacific after meeting with management and touring suburban London toy and specialty stores.</li><li> We believe, after a strong 2025, JAKKS Pacific continues to aggressively grow the European business, with a focus on key franchises (Disney Princesses, Mario Bros. and Sonic) and the ability to work with their key partners to register strong returns and expected margins.</li><li> Further, we believe there remains multiple potential growth opportunities, from anime to new retailer relationships and licenses and key movie launches, to drive even further expansion for multiple years.</li></ul>

We are reiterating our Buy rating, projections and $30 price target for JAKKS Pacific after meeting with management and touring suburban London toy and specialty stores. We believe, after a strong 2025, JAKKS Pacific continues to aggressively grow the European business, with a focus on key franchises (Disney Princesses, Mario Bros. and Sonic) and the ability to work with their key partners to register strong returns and expected margins. Further, we believe there remains multiple potential growth opportunities, from anime to new retailer relationships and licenses and key movie launches, to drive even further expansion for multiple years.

JAKK: United Kingdom Tour: Leveraging Strengths; Reiterate Buy, $30 PT

<ul><li>We are reiterating our Buy rating, $50 price target and projections for Build-A-Bear Workshop after visiting stores in Connecticut and Long Island.</li><li> We believe, as we enter the heart of the Halloween season, Build-A-Bear, after a second round of new “furry friends,” is focused on once again driving strong overall results and margins, as the company is maintaining inventory discipline and reducing discounting following a somewhat difficult Summer season.</li><li> Further, we believe demand for key Halloween related “furry friends” has remained strong beyond the almost immediate sell outs of the Posable Bat and Jumping Spider.</li></ul>

We are reiterating our Buy rating, $50 price target and projections for Build-A-Bear Workshop after visiting stores in Connecticut and Long Island. We believe, as we enter the heart of the Halloween season, Build-A-Bear, after a second round of new “furry friends,” is focused on once again driving strong overall results and margins, as the company is maintaining inventory discipline and reducing discounting following a somewhat difficult Summer season. Further, we believe demand for key Halloween related “furry friends” has remained strong beyond the almost immediate sell outs of the Posable Bat and Jumping Spider.

BBW: Snapping the Store: Focusing on Halloween Returns; Reiterate Buy, $50 PT

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x from 18.1x at the end of 2024.</li><li>Prospective earnings for the index are down 2.3% so far this year, but we note that it has outperformed the broader S&amp;P 600 Small Cap Index, which is down 6.3%.</li><li>Meanwhile, the S&amp;P SmallCap 600 Index is down 13.1% YTD, better than the WTR Consumer Products Index, despite relative earnings underperformance versus our index, as its prospective absolute P/E ratio compressed a lesser 1.2x to 15.3x from 16.5x at the end of 2024. </li></ul>

The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x from 18.1x at the end of 2024.Prospective earnings for the index are down 2.3% so far this year, but we note that it has outperformed the broader S&amp;P 600 Small Cap Index, which is down 6.3%.Meanwhile, the S&amp;P SmallCap 600 Index is down 13.1% YTD, better than the WTR Consumer Products Index, despite relative earnings underperformance versus our index, as its prospective absolute P/E ratio compressed a lesser 1.2x to 15.3x from 16.5x at the end of 2024. 

WTR Consumer Products Index Lags S&P 600 YTD Despite Relative Earnings Outperformance

<ul><li>We are reiterating our Buy rating, but lowering our price target to $50 (from $65) and lowering our FY26 and FY27 projections after Build-A-Bear Workshop reported better than expected 2QFY26 (July) EPS but missed Street revenue expectations and lowered overall guidance for FY26, driven by now projected flat annual commercial revenue growth (after a previous guide of 20% FY26 expansion) and weak store (including online) results.</li><li> While we view part of this downward revision as the new CEO resetting expectations, we believe the state of the consumer also played a role here and we are exercising even greater caution in the back end of FY26.</li><li> As such, while we remain positive on the Build-A-Bear business model, we are lowering our BBW price target to $50 (from $65) or 12.7X our FY27 EPS of $3.95.</li></ul>

We are reiterating our Buy rating, but lowering our price target to $50 (from $65) and lowering our FY26 and FY27 projections after Build-A-Bear Workshop reported better than expected 2QFY26 (July) EPS but missed Street revenue expectations and lowered overall guidance for FY26, driven by now projected flat annual commercial revenue growth (after a previous guide of 20% FY26 expansion) and weak store (including online) results. While we view part of this downward revision as the new CEO resetting expectations, we believe the state of the consumer also played a role here and we are exercising even greater caution in the back end of FY26. As such, while we remain positive on the Build-A-Bear business model, we are lowering our BBW price target to $50 (from $65) or 12.7X our FY27 EPS of $3.95.

BBW: 2Q26 Review: Still Working Things Out; Reiterate Buy, Lowering PT to $50

United States

Hasbro, Inc. designs, manufactures, and markets toys, games, interactive software, puzzles, and infant products in the United States and internationally. The Company's products include a variety of games, including traditional board, card, hand-held electronic, trading card, role-playing and DVD games, as well as electronic learning aids and puzzles as well as dolls and action figures.

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Hasbro Inc (HAS US)

BBW: Snapping the Store – London: Driving Profitable Growth; Reiterate Buy, $50 PT

We are reiterating our Buy rating, projections and $50 price target for Build-A=Bear Workshop after visiting company stores and shop in shop in...

Small Cap Consumer Research

JAKK: United Kingdom Tour: Leveraging Strengths; Reiterate Buy, $30 PT

We are reiterating our Buy rating, projections and $30 price target for JAKKS Pacific after meeting with management and touring suburban London...

Small Cap Consumer Research

BBW: Snapping the Store: Focusing on Halloween Returns; Reiterate Buy, $50 PT

We are reiterating our Buy rating, $50 price target and projections for Build-A-Bear Workshop after visiting stores in Connecticut and Long...

Small Cap Consumer Research

WTR Consumer Products Index Lags S&P 600 YTD Despite Relative Earnings Outperformance

The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x...

Water Tower Research

BBW: 2Q26 Review: Still Working Things Out; Reiterate Buy, Lowering PT to $50

We are reiterating our Buy rating, but lowering our price target to $50 (from $65) and lowering our FY26 and FY27 projections after Build-A-Bear...

Small Cap Consumer Research

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