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After 5 Years, Mattel's Top Line Returns To Growth; Q4 Guided Higher Than Average

After 5 Years, Mattel's Top Line Returns To Growth; Q4 Guided Higher Than Average

Mattel, Inc. (NASDAQ: MAT)'s stock hit a multi-year low of $19.16 on Friday after the company's earnings report disappointed investors. But not all analysts on the Street are ready to throw in the towel just yet, including UBS's Arpine Kocharyan, who maintains a Buy rating and $26 price target on Mattel's stock.

In fact, Mattel's earnings report consisted of its first top-line growth dating all the way back to the third quarter of 2013, Kocharyan stated in a research report. Net sales in the quarter grew 2 percent (3 percent in constant FX), which was a "tad better" than the 1.3 percent growth he had expected.


The toymaker did benefit in the second quarter from a favorable shift in the Easter holiday, and at the same time, wholesale point of sales outpaced shipping in the quarter while inventories were lean, Kocharyan added. On the other hand, gross margins of 41.0 percent were lower by 430 basis points year over year and short of the 42.9 percent the analyst expected.

So Now What?

Mattel maintains its full-year sales outlook of up by a low-single-digit, implying a growth of more than 7 percent in the back half of the year, Sheridan added in a follow-up research report. However, sales for the back half of 2017 will be more weighted in the fourth quarter and accurately reflects the tougher retail environment and consistent with commentary offered by its peers.

Finally, the analyst's price target is based on a 19x multiple on the analyst's 2018 estimated earnings per share.

At last check, shares of Mattel were down 8.57 percent at $19.48.

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Latest Ratings for MAT

Jan 2020MaintainsHold
Oct 2019MaintainsHold
Sep 2019MaintainsNeutral

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