Mattel (MAT) Stock Forecast & Price Target

Mattel is projected to achieve a gross margin expansion of 100 basis points to 50.8% due to reduced royalty expenses and lower tariff impacts, which bodes well for profitability. The toy retail market showed robust growth, with a 7% year-over-year increase in the first half of 2024 across G12 markets, and a meaningful rise in retailer orders suggests a strong demand environment as they address inventory needs. Additionally, Mattel anticipates a revenue increase to $5.68 billion in 2026, bolstered by successful product lines such as action figures and various entertainment properties, which are expected to compensate for declines in other segments.

Mattel is facing a negative financial outlook as evidenced by a projected decline in operating margin by 20 basis points to 12.2%, primarily due to increased advertising expenses and higher employee compensation, compounded by a 12% drop in North American sales. Gross profits fell to $871 million, significantly missing consensus expectations of $937 million, with adjusted EPS of $0.89 also falling short of the anticipated $1.06, highlighting operational inefficiencies. Furthermore, operating profits stood at $387 million, well below the consensus estimate and reflecting a substantial year-over-year decline in both operating margin and gross margin, negatively impacted by external economic factors such as inflation and tariffs.