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4 Reasons To Buy Mattel Stock

February 12, 2020 3:27 pm
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4 Reasons To Buy Mattel Stock

Toy companies were first caught in the middle of the U.S.-China trade war and could now be affected by the COVID-19 virus outbreak. Whatever challenges they face, children and adults alike still need their toys. Here are four reasons from Mattel Inc (NASDAQ:MAT) analysts to buy the toy stock.

Mattel's New Management

“We believe key leadership changes under CEO Ynon Kreiz (who realigned MAT’s focus on stabilizing sales and restoring profitability) set the foundation for improving execution,” JPMorgan's Tami Zakaria said in a Jan. 27 initiation note.

JPMorgan has a Overweight rating on Mattel with a $17 price target.

Mattel Stock's Topline Is Improving

As the streaming war heats up and companies are pushing more and more for original content, toys could benefit: the Baby Yoda character was all the rage when Disney Plus’ "The Mandalorian" debuted.  

“We expect MAT to grow sales LSD% in 2020 after consecutive declines from 2014 to 2018 supported by momentum in Barbie and Hot Wheels, while Fisher-Price stabilizes. We expect growth to accelerate beyond 2020 with eight movies and two Netflix shows utilizing MAT IP in the pipeline,” Zakaria said.

(NASDAQ:MAT) Cost Reductions, Improved Margins

“We believe MAT management has positioned the company effectively from an expense standpoint through its multi-year commitment to right-sizing its cost structure. During the third quarter of 2017, Mattel initiated its Structural Simplification (SS) cost savings program originally expected to exceed $650MM in cost savings by 2020. The program has since been a major success, and MAT is now on track to exceed savings by more than $854MM by 2019,” Zakaria said. 

Mattel's New Driver To Accelerate Growth

Mattel owns many brands, and it’s increasing its focus on owned content, which should drive accelerated growth, Wells Fargo analyst Timothy Conder said in a Feb. 6 note. 

Wells Fargo has a Overweight rating on Mattel with a $17 price target.

Mattel Price Action

The stock was trading 1.82% higher at $14.55 at the time of publication Wednesday.

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