Mattel (MAT) Stock Forecast & Price Target

Mattel is projected to experience an expansion in gross margin by 100 basis points to 50.8%, driven by a reduction in royalty expenses and lower tariff impacts. The toy retail market has shown resilience, with a 7% year-over-year increase in the first half of the year across G12 markets, suggesting strong demand that could benefit Mattel's sales. Additionally, the company forecasts substantial revenue growth in 2026, with expectations of $5.68 billion, supported by successful properties and programs, which are likely to compensate for anticipated declines in certain product lines.

Mattel is experiencing significant financial challenges as indicated by a projected decline in operating margin, which is expected to fall by 20 basis points to 12.2% due to increased advertising expenses and higher employee compensation, exacerbated by a 12% decline in North American sales. Gross profits are reported at $871 million, which falls short of the consensus estimate of $937 million, and an adjusted EPS of $0.89 is notably below the consensus of $1.06, highlighting a substantial downturn in profitability. The company also reports a concerning decrease in adjusted gross margins, which stand at 50.2%, a decline of 290 basis points year-over-year, influenced by adverse currency effects, inflation, and tariffs, suggesting broader operational inefficiencies and market challenges ahead.