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On Tuesday, Citi analysts demonstrated confidence in Mattel Inc . (NASDAQ:MAT) by increasing the price target from $19.00 to $22.00, while keeping a Buy rating on the stock. Currently trading at $16.20, well below its 52-week high of $22.07, InvestingPro analysis suggests the stock is undervalued. The revision follows Mattel’s robust first-quarter performance, which exceeded expectations in terms of sales and margins, with the company maintaining a healthy P/E ratio of 10.3x.
Mattel has indicated its ability to fully counterbalance the incremental tariff-related costs anticipated in 2025 and beyond. This capability comes despite the company’s recent decision to withdraw its financial guidance amid concerns about macroeconomic volatility and potential risks to consumer demand. Nevertheless, Citi analysts believe that Mattel’s efforts to gain more shelf space could help the company achieve its previously set financial targets through cost mitigation strategies. The company’s strong financial position is evidenced by its healthy current ratio of 2.38x and solid net income of $541.82 million over the last twelve months.
Despite the withdrawal of guidance, Citi analysts are optimistic about Mattel’s prospects, suggesting that the company is on track to modestly grow its earnings in the fiscal year 2025. The positive outlook is supported by what Citi describes as "early green shoots of a turnaround." These include the adjustment of the cost structure and the early signs of top-line growth, which are seen as encouraging developments for the toy manufacturer.
The price target adjustment to $22 reflects Citi’s revised higher estimates for Mattel’s future performance. This move signals the analysts’ belief that the company’s strategic actions will lead to positive financial outcomes, even as it navigates through a challenging economic landscape.
In other recent news, Mattel Inc. reported its first-quarter 2025 earnings, surpassing Wall Street expectations. The company posted an adjusted earnings per share (EPS) of -$0.05, better than the forecasted -$0.09, while revenue reached $827 million, exceeding the anticipated $786.01 million. These results were driven by strong performances in toy lines such as Disney (NYSE:DIS) Princess, Wicked, and Barney, and a 2% increase in net sales. Morgan Stanley (NYSE:MS) responded by raising its price target for Mattel shares to $17.00 from $16.00, maintaining an Equalweight rating. The firm cited Mattel’s strong revenue and gross margin performance as key factors for the adjustment. Despite the positive earnings, Mattel has paused its full-year 2025 guidance due to uncertainties surrounding tariffs and the economic environment. The company remains committed to its $600 million share repurchase target for the year. Mattel continues to focus on diversifying its supply chain to mitigate tariff impacts, with plans to reduce reliance on China-sourced production.
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