Market Overview

Analyst: Mattel's Fundamentals Don't Warrant Its Recent Run

Share:
Analyst: Mattel's Fundamentals Don't Warrant Its Recent Run

Mattel, Inc. (NASDAQ: MAT) was downgraded Thursday from Neutral to Underperform by D.A. Davidson analyst Linda Weiser. Weiser maintained her $12 price target on the stock.

The Thesis

Mattel shares closed Wednesday 29.5 percent above the April 20 low of $12.96, compared to the S&P 500’s 1 percent gain over the same period.

The company’s fundamentals haven't improved though, Weiser asserts. On the contrary, the analyst cut her sales and earnings projections below the Street’s estimates.

Weiser expects Mattel to face a hard second quarter stemming from the "Cars 3" merchandise channel fill and disruptions caused by the liquidation of Toys 'R' Us.

Plastic resin spot prices are also up 2 percent since Mattel reported Q1 earnings, suggesting margins will continue to be squeezed. Prices are up 30 percent since late-May 2017.

Several retailers have announced to increase shelf space for toys, easing the impact of Toys 'R' Us, but most plans will likely not see execution until late in the year. Most notably, Party City Holdco Inc (NYSE: PRTY) will open 50 toy pop-up stores for the holiday season.

Mattel will be counting on distribution channels opening up before then.

“Mattel's business is highly seasonal and its operating performance relies heavily on sales during the brief holiday season,” said Weiser in the note.

Price Action

Mattel shares were trading 2.1 percent lower to $16.42 at time of publication.

Related Links:

Party City Pop-Up Toy Stores Could Help Toymakers Stung By Toys 'R' Us Closures

What The Toys 'R' Us US Liquidation Means For Toy Makers

Latest Ratings for MAT

DateFirmActionFromTo
Feb 2019MaintainsOutperformOutperform
Dec 2018MaintainsOutperformOutperform
Nov 2018MaintainsUnderweightUnderweight

View More Analyst Ratings for MAT
View the Latest Analyst Ratings

Posted-In: D.A. Davidson Linda Weiser Toys R USAnalyst Color Downgrades Analyst Ratings Best of Benzinga

 

Related Articles (MAT + PRTY)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
APDUpgrades215.0
DPZReiterates325.0
ORLYMaintains435.0
NOWMaintains245.0
MCOMaintains195.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Peter Brandt Talks Trump, Oil, Bitcoin And Gold: 'No One's Talking About Farm Prices'

40 Stocks Moving In Thursday's Mid-Day Session