Mattel Narrows Losses In 1Q, Raises Outlook; Shares Open 7% Higher

Mattel Inc.’s shares opened 7% higher on Friday as the toy company updated its FY21 outlook. Losses narrowed in the first quarter while sales surged 47% to $874 million. Analysts were expecting sales of $684 million.

Mattel (MAT) reported an adjusted net loss per share of $0.1 versus a loss of $0.56 per share in the same quarter last year. Analysts were expecting an adjusted loss of $0.35 per share.

MAT also updated its outlook for FY21 and expects net sales to rise between 6% to 8% year-on-year in constant currency terms. The company has forecasted adjusted EBITDA to land between $800 and $825 million and expects to incur capex of between $125 million and $150 million.

Mattel’s Chairman and CEO, Ynon Kreiz said, “This was another record quarter for the company, with truly exceptional results reflecting the success of the turnaround, as we continue to drive transformational improvements and acceleration in our business.”

“Following the third consecutive quarter of growing market share, we are strengthening our position as a consistent leader in the toy industry. We believe we are very well-positioned to improve profitability and accelerate topline growth in 2021 and beyond,” Kreiz added.

The company’s gross billings in the United States rose 67% year-on-year to $512 million in constant currency terms fuelled by growth in the dolls, vehicles, action figures, building sets, games and infant, toddler and preschool toys categories. (See Mattel stock analysis on TipRanks)

On April 21, DA Davidson analyst Linda Bolton Weiser reiterated a Buy and a price target of $23 on the stock. Weiser stated in a note to investors, “MAT is less exposed to categories that got the biggest COVID boosts in 2020, and the company has easy prior-year comps in 1H21. Cost savings and fixed cost leverage should drive operating margin expansion throughout 2021.”

Overall, consensus among Wall Street analysts is a Strong Buy based on 8 Buys. The average analyst price target of $24.19 implies an upside potential of about 7.7% to current levels.

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