Citi Downgrades Mattel Rating to Neutral
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Should l Buy MAT?
Source: stocktwits
- Rating Downgrade Impact: Citi downgraded Mattel's rating from 'Buy' to 'Neutral' and slashed its price target from $25 to $16, indicating a 'sudden and substantial' shift in the investment case after reviewing the latest quarterly results, reflecting concerns about future profitability.
- Poor Sales Performance: In Q4, Mattel's sales rose 7% year-on-year to $1.77 billion, with adjusted EPS of $0.39, both falling short of analysts' expectations of $1.83 billion and $0.55, indicating a weakening competitive position in the market.
- Severe Market Reaction: Following the downgrades from two major Wall Street banks, Mattel's stock fell over 26% in pre-market trading on Wednesday, highlighting increasing investor concerns about the company's future sales momentum and reflecting a pessimistic sentiment regarding Mattel's growth prospects.
- Retail Sentiment Shift: Despite analysts' cautious outlook, retail sentiment on Stocktwits shifted from 'bullish' to 'extremely bullish', with message volume significantly increasing within 24 hours, indicating a rising interest in the stock among retail investors.
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Analyst Views on MAT
Wall Street analysts forecast MAT stock price to rise
8 Analyst Rating
4 Buy
4 Hold
0 Sell
Moderate Buy
Current: 15.850
Low
20.00
Averages
24.43
High
30.00
Current: 15.850
Low
20.00
Averages
24.43
High
30.00
About MAT
Mattel, Inc. is a global toy and family entertainment company. The Company's operating segments include North America and International. The North America segment markets and sells toys and consumer products in the United States and Canada. Products marketed and sold by the International segment are generally the same as those marketed and sold by the North America segment, although some are developed or adapted for particular international markets. Its franchise brands include Barbie, Hot Wheels, Fisher-Price, American Girl, Thomas & Friends, UNO, Masters of the Universe, Matchbox, Monster High, MEGA, and Polly Pocket, as well as other popular properties that it owns or licensed in partnership with global entertainment companies. Its offerings include toys, content, consumer products, digital and live experiences. The Company’s products are sold directly to consumers through its e-commerce platform and various third-party e-commerce channels.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Sales Growth Overview: Despite missing estimates for the crucial holiday quarter, net sales rose 7% year-over-year to $1.77 billion in Q4, or 5% on a constant currency basis, reflecting resilience in market demand.
- Regional Sales Performance: Sales in North America increased by 5%, while international sales surged by 11%, demonstrating Mattel's strong performance in global markets despite competitive pressures.
- Future Outlook: Mattel projects net sales growth of 3% to 6% for 2026 and plans to invest $150 million in digital and strategic initiatives to enhance its market competitiveness.
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- Investor Outlook: With a weak triad formation on the monthly chart, the remainder of Phase 18 is expected to continue facing consolidation and volatility, lacking sustained bullish advances, prompting investors to remain cautious.
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- Inventory Management Challenges: The uncertainty surrounding tariff implementation complicated Mattel's ordering processes, forcing the company to offer discounts to clear excess inventory, which further compressed profit margins and resulted in a $35 million decrease in net income to $106 million.
- Disappointing Earnings Forecast: Mattel's adjusted earnings per share of $0.39 fell significantly short of Wall Street's expectation of $0.55, indicating severe challenges to the company's profitability in the current economic climate.
- Cautious Future Outlook: While Mattel anticipates sales growth of 3% to 6% in 2026, management warned that adjusted earnings per share could decline by as much as 16%, reflecting short-term profitability pressures despite strategic investments aimed at growth in 2027 and beyond.
See More
Mattel CEO Boosts Holdings Amid Sales Challenges
- CEO Stock Purchase: Mattel CEO Ynon Kreizac acquired 65,000 shares at an average price of $15.5277, increasing his total holdings to 1,794,217 shares, indicating confidence in the company's future prospects.
- Sales Growth Overview: Despite missing estimates for the crucial holiday quarter, net sales rose 7% year-over-year to $1.77 billion in Q4, or 5% on a constant currency basis, reflecting resilience in market demand.
- Regional Sales Performance: Sales in North America increased by 5%, while international sales surged by 11%, demonstrating Mattel's strong performance in global markets despite competitive pressures.
- Future Outlook: Mattel projects net sales growth of 3% to 6% for 2026 and plans to invest $150 million in digital and strategic initiatives to enhance its market competitiveness.
See More
Stocks Remain Steady Amid Easing Inflation Rates
- Inflation Report Impact: A cooler-than-expected inflation report resulted in flat stock performance for the day.
- Treasury Yields Reaction: The report led to lower Treasury yields as investors anticipated potential rate cuts in the coming months.
See More
Mattel Stock Faces Dim Long-Term Outlook
- Phase Analysis: Mattel's stock is currently in Phase 18, the final stage of its 18-phase Adhishthana cycle, indicating a dim long-term outlook with a lack of strong upward momentum.
- Structural Weakness: From April 2013 to February 2019, during Phases 14 to 16, Mattel's stock failed to exhibit the bullish structure necessary for a Nirvana move, losing approximately 81% of its value, which highlights significant structural weakness.
- Investor Outlook: With a weak triad formation on the monthly chart, the remainder of Phase 18 is expected to continue facing consolidation and volatility, lacking sustained bullish advances, prompting investors to remain cautious.
- Misconception of Value Opportunity: The recent decline in stock price should not be viewed as a value opportunity, as the broader structural setup does not yet support a durable upside move, necessitating a wait for the current cycle to complete and reset before a more constructive outlook can emerge.
See More
Hasbro Shares Have Potential for Further Growth
Shift in Popularity: Kids and adults are increasingly engaging with Magic: The Gathering and Dungeons & Dragons, indicating a shift in play preferences.
Impact on Companies: This trend is beneficial for Hasbro, the owner of these games, while posing challenges for Mattel, which owns Barbie and Hot Wheels.
See More
US Stock Market Close and Employment Data Analysis
- Strong Employment Data: US nonfarm payrolls for January increased by 130,000, surpassing expectations of 65,000, indicating labor market stability, while the unemployment rate unexpectedly fell by 0.1% to 4.3%, which is likely to have a positive impact on economic recovery.
- Interest Rate Expectations Shift: Following the robust employment report, the market's expectation for a Fed rate cut next month dropped from 23% to 6%, with the 10-year T-note yield rising by 3 basis points to 4.17%, reflecting a cautious outlook on future monetary policy.
- Mixed Market Performance: The S&P 500 closed unchanged, the Nasdaq 100 rose by 0.29%, while the Dow Jones Industrial Average fell by 0.13%, highlighting a contrast between strong tech stock performance and weakness in software stocks.
- Optimistic Earnings Outlook: Over 78% of the 335 S&P 500 companies that reported earnings exceeded expectations, with Q4 earnings growth projected at 8.4%, indicating that sustained corporate profitability will support long-term stock market gains.
See More
Mattel's Q4 Earnings Miss Expectations, Shares Plunge
- Earnings Decline: Mattel's Q4 net sales rose 7% year-over-year to $1.8 billion; however, rising tariff-related costs led to a 4.8 percentage point drop in gross margin to 45.9%, directly impacting profitability.
- Inventory Management Challenges: The uncertainty surrounding tariff implementation complicated Mattel's ordering processes, forcing the company to offer discounts to clear excess inventory, which further compressed profit margins and resulted in a $35 million decrease in net income to $106 million.
- Disappointing Earnings Forecast: Mattel's adjusted earnings per share of $0.39 fell significantly short of Wall Street's expectation of $0.55, indicating severe challenges to the company's profitability in the current economic climate.
- Cautious Future Outlook: While Mattel anticipates sales growth of 3% to 6% in 2026, management warned that adjusted earnings per share could decline by as much as 16%, reflecting short-term profitability pressures despite strategic investments aimed at growth in 2027 and beyond.
See More
