Mattel Inc. is set to release its second-quarter results on Wednesday, following the highly anticipated release of the “Barbie” movie. The film, starring Margot Robbie and Ryan Gosling, has created a buzz around the toy maker’s iconic doll, putting it in the global spotlight.
With a marketing blitz in full swing, Warner Bros. Discovery Inc.’s “Barbie” is expected to benefit Mattel greatly. The company has seized the opportunity to capitalize on the “Barbie” hype by unveiling a new product collection and entering into various brand partnerships.
However, Stifel analyst Drew Crum warns of potential inventory issues that could overshadow Mattel’s results. In a note, he stated that they are projecting significant sales declines and losses due to excess retail inventory among other factors. Nonetheless, Crum believes that the results will show sequential gains and expects positive commentary on fundamental improvement for the second half of the year.
While Crum doesn’t anticipate a substantial impact from the recent “Barbie” excitement in the second-quarter results, he acknowledges that this could change. Although their estimates suggest modest contributions to results ($0.10), increasing box-office forecasts for the film could potentially lead to a more significant outcome. Despite this uncertainty, Crum maintains a positive outlook on MAT and reaffirms a Buy-rating with a target price objective of $26 per share.
The positive reception of “Barbie” has already had an immediate effect on Mattel’s stock, which closed 1.8% higher on Monday. The movie’s impressive $162 million in North American weekend ticket sales propelled it to become the biggest opening of the year. As a result, the S&P 500 index also ended Monday’s session with a 0.4% increase.
Analysts surveyed by FactSet predict that Mattel will report a loss of 3 cents per share and revenue just exceeding $1 billion.
Mattel Expects Sales Recovery in 2023, ‘Barbie’ Movie Could Boost Toy Sales
Overview
In a recent note released by D.A. Davidson analyst Linda Bolton Weiser, it was revealed that Mattel, the renowned toy company, is not heavily emphasizing its Barbie movie in terms of financial projections. Bolton Weiser stated that the company’s 2023 guidance already accounts for a strong sales recovery in the second half of 2023, after retail inventory levels were reduced in the first half. However, she also highlighted the potential impact of the “Barbie” movie on toy sales in the short term, as well as its ability to reinforce the brand’s cultural significance in the long run.
Boosting Toy Sales and Revenue
According to Bolton Weiser, the “Barbie” movie could have a positive effect on toy sales, which would benefit Mattel. Additionally, she mentioned that the film might contribute to an increase in the company’s brand licensing revenue. This type of revenue is especially advantageous for Mattel as it carries a 100% gross margin. Bolton Weiser also noted that the movie could lead to an earnings boost for Mattel, assuming the company has a share in the “movie economics.” While specific details regarding these deals have not been disclosed, Mattel’s management has stated that further information will be provided if the earnings contribution from the movie becomes particularly significant in any given quarter.
Analyst Ratings
FactSet conducted a survey of 11 analysts on Mattel’s stock. Out of these analysts, nine have assigned a buy rating, while two have a hold rating for the company. This positive outlook reflects market confidence in Mattel’s future prospects.
Stock Performance
Over the past three months, Mattel’s stock has shown a notable increase of 25.3%. In comparison, during the same period, the S&P 500 index gained 10.1%. This significant rise in Mattel’s stock further highlights the market’s optimism regarding the company’s performance.
In conclusion, while Mattel’s focus on its Barbie movie may not heavily impact its financial projections, there is potential for increased toy sales, brand licensing revenue, and earnings boost. Market analysts have shown a favorable outlook for Mattel, which is reflected in the company’s rising stock value.
