Mattel (MAT) Stock Forecast & Price Target

Mattel is projected to experience a gross margin expansion of 100 basis points to 50.8% due to reduced royalty expenses and lower tariff impacts, indicating stronger profitability. The toy retail market has shown a positive trend with a 7% year-over-year increase in the first half of 2024 across G12 markets, reflecting increased consumer demand and retailer orders ahead of the holiday season. Additionally, Mattel expects a robust revenue growth of 8% in 2026, supported by successful franchises and new programs, despite anticipated declines in certain established brands.

Mattel is facing a challenging financial landscape, reflected in a projected decline in operating margins by 20 basis points to 12.2%, largely due to increased advertising expenses and higher employee compensation, further exacerbated by a 12% drop in North American sales. Gross profits of $871 million fell short of the consensus estimate of $937 million, attributable to rising advertising costs and SG&A deleverage, while adjusted EPS of $0.89 was also significantly below the consensus of $1.06. Additionally, the company's operating profits of $387 million represented a 22.3% margin, down 500 basis points year-over-year, and Barbie revenues are anticipated to decline compared to the previous year despite past successes, indicating long-term challenges for the brand.