Mattel (MAT) Stock Forecast & Price Target

Mattel is projected to achieve a gross margin expansion of 100 basis points to 50.8% due to lower royalty expenses and reduced tariff impacts, which reflects a positive trend in its cost structure. The toy retail market saw a year-over-year increase of 7% in the first half of 2024 across G12 markets, indicating healthy demand and positioning Mattel favorably within a growing industry. Additionally, the company's fourth-quarter estimates for sales, operating profit, and earnings per share have been revised upwards to $1.86 billion, $247 million, and $0.53 respectively, representing significant growth in both sales and profitability metrics that contribute to a favorable long-term outlook.

The negative outlook for Mattel's stock is underscored by a projected decline in operating margin to 12.2%, primarily driven by increased advertising expenses and higher employee compensation, along with a significant 12% drop in North American sales. The company reported gross profits of $871 million, falling short of the consensus estimate of $937 million, and adjusted EPS of $0.89, which was notably below the anticipated $1.06. Furthermore, operating profits of $387 million represent a 22.3% margin, a decline of 500 basis points year-over-year, compounded by unfavorable impacts such as currency fluctuations, inflation, and tariffs.