Sterne Agee, having cut its second-quarter forecast for Mattel, Inc. MAT, now expects the company to report a loss in the second quarter, citing a conservative gross margin rate.
"We reduce our second-quarter EPS estimate to a loss of $0.03 from a gain of $0.03 reflecting a more conservative gross margin rate in the quarter (similar to Q1) partially due to FX headwinds offset by supply chain efficiencies and cost savings," analyst Lee Giordano wrote in a note.
Street analysts, on average, expect the toy maker to report a loss of $0.04 for the second quarter.
Giordano, who maintains his Neutral rating and $29 price target on the stock, expects gross margins to improve in the second half of the year on "more moderate FX impact, higher seasonal revenues, a more favorable country mix, accelerated supply chain savings, and easier comparisons."
As a result, the analyst reiterated his full-year 2016 and 2017 EPS estimates of $1.40 and $1.78, respectively. The analyst also maintained his 2016 gross margin estimate at 49.6 percent.
At time of writing, shares of Mattel were down 0.59 percent to $31.03.
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