Mattel (MAT) Stock Forecast & Price Target

Mattel's gross margin is expected to expand by 100 basis points to 50.8% due to lower royalty expenses and a reduced tariff impact, contributing to overall profitability. The toy retail sector demonstrated a positive performance, with a 7% year-over-year increase in sales across G12 markets during the first half of the year, indicating a robust demand for toy products. Additionally, projected revenue for 2026 is anticipated to reach $5.68 billion with an 8% growth rate, driven by strong franchises and new product programs that are expected to offset declines in certain brands.

Mattel is facing a negative outlook primarily due to a projected decline in operating margin by 20 basis points, attributed to increased advertising expenditures for self-published mobile games and higher employee compensation, alongside a significant 12% drop in North American sales. The company's gross profits fell to $871 million, significantly underperforming against consensus expectations of $937 million, largely impacted by elevated advertising costs and SG&A deleverage, while adjusted EPS of $0.89 also lagged behind the anticipated $1.06. Additionally, the company is struggling with decreasing Barbie revenues compared to the previous year, contributing to an overall decline in adjusted gross margins to 50.2%, exacerbated by unfavorable currency impacts, inflationary pressures, and tariffs.