Mattel, Inc. (MAT) shares experienced a surge on Thursday following the release of the company’s third-quarter earnings report. The toy giant beat analyst expectations on earnings per share (EPS), reporting $1.09 per share, compared to the consensus estimate of 95 cents. However, revenue fell short of expectations, coming in at $1.843 billion versus the anticipated $1.858 billion.
Despite the mixed performance, Mattel revised its FY24 net sales guidance to a comparable-slightly down in constant currency, while maintaining its adjusted EPS outlook at $1.35 to $1.45, exceeding the current estimate of $1.44.
This positive earnings news sparked a wave of analyst commentary and adjustments to price targets.
Morgan Stanley analyst Megan C Alexander raised her price target to $22 from $21, maintaining an Equal-weight rating. While Alexander acknowledged the strength of the third-quarter results, she expressed concerns about the implied fourth-quarter EPS guidance, which appears to be below expectations. She attributed this to factors like a shorter holiday season, an impending election, and ongoing consumer uncertainty. While Alexander anticipates demand drivers to strengthen in 2025, particularly with potential tent-pole movie releases, she believes it’s too early to make definitive conclusions, especially in an election year where tariff risks loom. As a result, Alexander revised her fourth-quarter sales forecast to $1.642 billion from $1.677 billion, and her EPS estimate to $0.18 from $0.41. For FY24, she adjusted sales to $5.374 billion from $5.390 billion, and EPS to $1.44 from $1.45. For FY25, she lowered sales to $5.498 billion from $5.514 billion and EPS to $1.47 from $1.53.
Goldman Sachs analyst Stephen Laszczyk also adjusted his price target, lowering it to $22 from $23 while maintaining a Buy rating. Laszczyk attributed the price target reduction to the third-quarter revenue miss, the reduced revenue guidance, and limited visibility into long-term growth. However, he largely maintained his adjusted EPS estimates, reflecting the third-quarter outperformance and continued cost efficiencies. Laszczyk also slightly reduced his share repurchase outlook due to the slower pace observed in the third quarter.
D.A. Davidson analyst Linda Bolton Weiser expressed a cautious view on the sales guidance, considering it ambitious. However, she believes the upper end of the EPS range at $1.45 is achievable. Weiser reduced her 2025 EPS estimate by $0.06 to $1.52 and adjusted her sales estimate to -4.9% year-over-year (Y/Y) from -0.4% for the fourth quarter and -2.5% Y/Y from -0.1% for 2024. She maintained her price target at $27 with a Buy rating.
Stifel analyst Drew E. Crum reaffirmed his Buy rating and price target of $23. Crum highlighted that key financial metrics were mixed compared to Street estimates, influenced by the previous year’s results from the Barbie movie. While the top line was weaker, it was offset by significant improvement in adjusted gross margins, leading to earnings growth. Crum projects FY24 adjusted EPS of $1.44, slightly higher than his previous estimate of $1.41, and net revenue of $5.382 billion (-1% y/y; down from $5.420 billion prior view). For 2025, he estimates adjusted EPS of $1.61 (+12%; vs. $1.55 previously) and revenue of $5.590 billion (+4%; vs. $5.634 billion prior).
Despite the mixed outlook from analysts, MAT shares rose 3.69% to $18.44 at the last check on Thursday, reflecting a positive market sentiment. However, investors will be closely watching Mattel’s performance in the crucial holiday season and beyond to gauge the company’s future growth trajectory.
