Benzinga | May 13, 2021 11:56AM EDT

Funko Stock Jumps After Double Upgrade, Analyst Raises Price Target By 150%

Shares of toy and collectible maker Funko Inc (NASDAQ:FNKO) jumped 8% on Thursday morning after the stock landed a double upgrade on Wall Street.

The Analyst: Bank of America analyst Alexander Perry upgraded Funko from Underperform to Buy and raised his price target from $12 to $30.

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The Thesis: In the upgrade note, Perry said Funko is making tremendous strides in expanding its addressable market with toys, games and NFTs.

Perry estimates the toys and games market represents an $87 billion opportunity for Funko, and the company's new products can potentially help it capture a larger slice of the pie. In particular, Perry said the expansion of the company's games category outside of strategy and into kids and family games could help Funko grow its presence in discount retail stores, such as Walmart Inc (NYSE:WMT) and Target Corporation (NYSE:TGT).

Funko is also launching a new Gold line of vinyl figurines, which Perry says could expand the company's target demographic to a younger group of "sneakerhead" consumers and increase the brand's presence on resale platforms like StockX and GOAT. In addition, he says Funko is generating momentum with its Pop! Brand by launching new products, such as sports, music and anime albums and trading cards.

Funko also plans to launch its NFT business in June by offering a weekly unique digital collectible on the WAX blockchain.

"While we do not expect meaningful revenue contribution this year & believe the market is relatively nascent, we see long-term potential given the significant growth of NFTs," Perry said.

Benzinga's Take: It's difficult to predict the future of the collectibles business, particularly when it comes to brand new genres like NFTs. However, keeping up with the latest trends is critical for toy and collectible makers, and it appears Funko is being aggressive in doing just that.

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(Photo: Funko)