Mattel (MAT) Stock Forecast & Price Target

Mattel is projected to achieve a gross margin expansion of 100 basis points to 50.8%, driven by reduced royalty expenses and lower tariff impacts. The toy retail market is experiencing significant growth, with a 7% year-over-year increase in the first half of the year, supporting demand for Mattel's diverse product portfolio, which includes iconic brands like Barbie and Hot Wheels. Furthermore, the company anticipates an 8% revenue growth in 2026, reaching $5.68 billion, bolstered by strong performance in action figures and strategic programming initiatives.

Mattel's financial outlook appears negative due to a projected decline in operating margin by 20 basis points to 12.2%, primarily driven by increased advertising expenses and higher employee compensation, alongside a 12% drop in North American sales. The company's gross profits of $871 million fell significantly short of the consensus estimate of $937 million, contributing to an adjusted EPS of $0.89, which was well below the expected $1.06. Additionally, the 22.3% operating margin represents a substantial decline of 500 basis points year-over-year, exacerbated by decreased revenues from key product lines such as Barbie, which are on track to underperform compared to 2022 levels.