Mattel Surges on Upbeat Forecast Amid Tariff Uncertainty
Mattel (MAT) shares soared 14% in premarket trading after upbeat earnings guidance and indications of stabilizing toy demand.
Despite tariff-related uncertainty, Mattel projected earnings growth, surprising analysts. Arpine Kocharyan of UBS notes the guidance as a significant takeaway from the Q4 results.
To mitigate tariff impacts, Mattel plans to increase product prices. The company expects no country to account for over 25% of global production by 2027, with China's share decreasing from 40% to 25%.
However, analysts remain skeptical about the ease of price pass-through in a sluggish demand environment. Megan Clapp of Morgan Stanley expresses caution.
Despite a 1% decline in 2024 sales, Mattel's gross margins improved significantly. Strong demand for Hot Wheels and action figures offset pressure on Barbie sales.
Several brokerages, including Jefferies, have raised price targets for Mattel. The company's forward P/E ratio of 11.07 compares favorably to competitor Hasbro's at 12.90.
Hasbro is slated to report quarterly earnings on February 20, with shares showing modest premarket gains.