JAKKS Pacific (JAKK) is expected to benefit from the strong opening box office results of "Moana 2" and the projected solid performance of "Sonic the Hedgehog 3," as the company holds product licenses for both franchises, B. Riley Securities said in a note Friday.

The firm said both movies could boost demand for toys and merchandise in Q4, while the lack of family and animated film releases in January 2025 could extend the sales potential of their associated toy lines into H1 2025.

"Management took a chance that both of these films would generate solid product demand and chose to hold inventory beyond the traditional free-on-board sales," the firm said.

JAKKS shares trade at a significant 37% discount compared to peers, presenting an opportunity for valuation rerating as growth becomes more evident in 2025, according to the note.

The brokerage reiterated its buy rating and $41 price target on JAKKS' stock.

Price: 29.15, Change: +1.15, Percent Change: +4.11