Mattel stock rating reiterated at Buy by UBS on new CFO’s expertise

UBS reiterated its Buy rating and $29.00 price target on Mattel Inc . (NASDAQ:MAT) following a meeting with the toy company’s new Chief Financial Officer Paul Ruh in New York. According to InvestingPro data, Mattel currently trades at a P/E ratio of 12.18, suggesting potential undervaluation relative to its growth prospects. The investment firm highlighted Ruh’s extensive experience in consumer packaged goods, particularly in supply chain management, balance sheet optimization, and cost discipline.

The UBS analyst noted that while Ruh brings "extensive expertise that essentially covers all aspects of running a solid finance organization," his experience with intellectual property-driven franchises appears "somewhat relatively limited." The new CFO previously worked in an industry that typically has more visibility than the toy business, according to the research note. InvestingPro analysis shows Mattel maintains strong financial health with a "GOOD" overall rating and healthy liquidity, with current assets more than double its short-term obligations.

UBS reported that Ruh maintains "a clear focus on continued cost discipline and prudent capital allocation" at Mattel. The meeting also covered the current retail environment and visibility into the second half of the year for the toy manufacturer.

The investment firm indicated that Mattel’s financial communication strategy is unlikely to change significantly under the new CFO. According to UBS, the company will continue its practice of issuing only annual guidance rather than quarterly forecasts.

Ruh joined Mattel with an "eventful tenure in his most recent role that involved IPO, turnaround and activism," the UBS analyst wrote, suggesting broad experience in managing complex financial situations before taking the position at the toy company. With analyst targets ranging from $17 to $30, and five analysts recently revising earnings estimates upward according to InvestingPro, investors seeking deeper insights can access comprehensive analysis through InvestingPro’s detailed research reports, available for over 1,400 US stocks including Mattel.

In other recent news, Mattel Inc. announced a strategic collaboration with OpenAI to develop AI-powered products and experiences. This partnership aims to integrate OpenAI’s advanced technology, such as ChatGPT Enterprise, into Mattel’s business operations to enhance product development and audience engagement. Additionally, Wolfe Research maintained its Outperform rating on Mattel, citing the company’s potential for market share gains due to its diversified manufacturing strategy, which could give it an edge over competitors reliant on Chinese production. In another development, Mattel launched "Mattel Match: Toybox Unlocked," a free-to-play mobile game in collaboration with Uken Games, featuring a crossover of iconic brands like Barbie and Hot Wheels. The game is currently in a soft launch phase in the Philippines and Canada, with plans for a wider release. Furthermore, Mattel unveiled the Hot Wheels Speed Snap Track System, designed to simplify track assembly and enhance customization options, set to be available in stores this fall. This new system aims to make track building more intuitive for children and easier for parents to manage.

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