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: Mattel had a ‘blowout’ quarter but the stock doesn’t reflect it, analysts say

Mattel Inc. posted a surprise profit in the first quarter and has much to look forward to, but analysts say the stock doesn’t reflect the good news.


reported net income of $21.5 million, or 6 cents per share, after a loss of $112.4 million, or 32 cents per share, last year. The company reported adjusted earnings per share of 8 cents beat the FactSet consensus for a loss of 4 cents. Sales of $1.041 billion rose from $874.2 million and also beat the FactSet consensus for $917 million.

The stock edged up 0.5% in early Thursday trading, and has advanced 14.3% for the year to date.

Looking ahead, Warner Bros. posted the first images of actress and producer Margot Robbie as Barbie on Twitter this week, with the film due out next year. And this year, “Jurassic World,” “Minions,” and “Lightyear” releases should give Mattel a bump.

The Wall Street Journal reported this week that Mattel has been in early talks for a takeover.

“They would not comment on media reports of a possible take-out, which we think is possible because: (1) CEO Ynon Kreiz has sold companies before; and (2) we think he is frustrated with the stock’s relatively low valuation despite nearly flawless execution, a robust growth outlook, and ownership of some of the biggest brands in consumer products,” wrote D.A. Davidson in a note.

D.A. Davidson rates Mattel stock buy with a $45 price target.

See: Barbie is all virgin plastic for now — but Mattel’s pledge for less packaging and recycled toys means change is coming

Also: Christmas in July: Hasbro moves up inventory purchases to make sure there are enough toys for the holidays

“With another blowout quarter, Mattel delivered top line, margin and EPS well ahead of expectations, despite considerably tough year-over-year comps and cost pressures, reiterating full year guidance despite Russia/Ukraine impact and incremental inflation,” wrote UBS analysts.

“We note investor sentiment has been reflecting growing concern around growth after two years of above-average growth for the industry, and general market caution over health of the consumer and inflationary pressures.”

UBS rates Mattel stock buy with a $35 price target.

Mattel has also just announced a Hot Wheels movie and is growing its portfolio of mobile games.

“The months ahead are looking very strong in terms of licensed products since theatrical releases are finally back in sync with what’s in the toy aisles. Jurassic World Dominion and Lightyear have the potential to do big business this summer,” said James Zahn, deputy editor at the Toy Book.

“Inflation has been a real concern in recent months, but it’s notable that price increases haven’t been as dramatic with Mattel products when compared to other major players in the toy industry.”

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