Hasbro's shares have outperformed the broader market year to date, rising by 10% compared to a 1% decline in the Morningstar Global Markets Index as of April 28. We continue to view the shares as undervalued relative to our fair value estimate of $83. We believe investors have not fully recognized Hasbro's successful business transition, which included the sale of its entertainment division, enabling the company to achieve structurally higher operating margins.
We anticipate a significant improvement in revenue mix, with the high-margin Wizards of the Coast and digital segments projected to account for approximately 41% of sales by 2025, up from 29% in 2023. Additionally, by concentrating on core competencies, Hasbro is poised to benefit from focused innovation and a streamlined operating model, enhanced by the outlicensing of lower-productivity brands to partners, which should optimize working capital.
Moreover, due to a rigorous focus on expenses, Hasbro aims to reduce gross costs by $1 billion from 2021 levels by the end of 2027, which will support profit growth. The company exceeded its 20% operating margin target in 2024, and we believe it has the potential to reach 23.5% by fiscal 2028. Therefore, we see a strong opportunity for Hasbro to exceed expectations, driven by renewed emphasis on product innovation, cost management, and a lean operating structure.
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