Mattel Not Toying Around With Its Turnaround Effort

MKM Partners believes that the recent pull back in stock price of Mattel, Inc. (NASDAQ: MAT) and the turnaround efforts provided favorable catalyst to upgrade from Neutral to a Buy rating. The firm has a price tag of $36 on the company's stocks. Since August 11 when the stock hit $34.12, shares of the company dropped more than 11 percent.

Analyst Eric Handler thinks that Mattel has placed well to deliver accelerated revenue growth as the company generated close to half of gross revenue from Barbie and Fisher in the recent periods. He expects revenue to grow 5.5 percent in the current year and roughly 7 percent next year.

Related Link: Mattel Could Be A Good Way To Play With Positive Toy Industry Trends

The brokerage listed the following key notable other initiatives that would boost revenue:

• Wheels and the licensing agreements connected with Star Wars, Marvel and Fast & Furious film universes.
• Cars, new products and mega brands apart from other segments.
• DC Comics with options for several movie and TV properties besides Super Hero girls dolls.
• American Girl and retail initiatives expansion.

"The combination of accelerating revenue growth and ongoing expense management is expected to produce a return in 2017 to the low end of Mattel's long term 15–20 percent operating margin range. Leverage is considerable within Mattel's model as every 100bps of margin improvement is worth $0.14 to EPS," the brokerage viewed in a research note.

MKM expects Mattel to announced fresh cost cutting program in the investors meeting of November 3. The firm expects EPS of $0.68 on revenue of $1.744 billion for the third quarter, which is below the Street estimates of $0.71 on $1.778 billion in revenue.

At last check, Mattel was up 0.95 percent at $30.34.

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