What could possibly revitalize Mattel (NASDAQ:MAT) stock during a year when everyone’s focused on tech giants? A blockbuster movie can do the trick, as Mattel doesn’t make films, but it can reap the rewards of one particular cinematic phenomenon. Thus, I’m bullish on MAT stock because a famous doll’s resurgence could fuel potent profits for Mattel.
Mattel has been manufacturing toys and games that kids love. As we’ll see, there’s one specific doll franchise that today’s children are just discovering while their parents get a rush of nostalgia over the decades-old toy line.
Additionally, there’s a quarterly event that could propel Mattel stock to fresh short-term highs. So, let’s take a closer look at the two upcoming events that will undoubtedly put Mattel in the headlines.
Mattel Gets a Chance to Redeem Itself
Here’s the first of two dates to mark on your calendar. Mattel is set to release its second-quarter 2023 earnings results on July 25. Hopefully, the company will redeem itself after Q1’s underwhelming performance.
Suffice it to say, Mattel’s first quarter was a rough one. On a year-over-year basis, the firm’s net sales were down 22%, and the company’s gross margin declined 640 basis points. Furthermore, Mattel slipped into an unprofitable state, reporting a net loss of $106 million versus a net income of $21 million in the year-earlier quarter.
MAT stock chopped around in the weeks following that uninspiring quarterly report. Even while CEO Ynon Kreiz called Mattel’s fundamentals “strong,” the investing community still needed a catalyst before it would give Mattel its seal of approval.
That seal of approval could happen sooner than expected due to an upcoming film release — but more on that in a moment. For the time being, just be sure to mark your calendar for July 25. If Mattel can beat the Street’s call for a second-quarter EPS of -$0.04, there may be a powerful share price rally in store.
Mattel Stock Rises Ahead of Barbie Movie Release
After chopping around for a while, MAT stock recently jumped from $18 to $21. What could have caused this sudden bidding frenzy? We can chalk it up to a movie release that has kids, adults, and financial traders enthused about a famous doll coming to life on the silver screen.
Of course, I’m referring to the upcoming live-action Barbie movie that’s scheduled for release on July 21. So, even if you have no intention of seeing the film, go ahead and mark that date on your calendar, as it could prove to be a watershed moment for Mattel and its stakeholders.
How impactful will the new Barbie move be for Mattel’s top line? Stifel analyst Drew Crum estimates that the film could generate domestic box office opening weekend receipts of $90 million to $100 million. Eventually, Crum calculates, the Barbie film could gross $450 million to $550 million worldwide.
Even if the global gross is at the low end of that range, or $450 million, Crum figures that Mattel could reap a $0.10 EPS increase this year from the Barbie phenomenon. Bear in mind, it’s not just about the film itself; Mattel could rake in huge revenue on increased sales of Barbie dolls as well as on licensing fees related to Barbie apparel and other salable items.
Is MAT Stock a Buy, According to Analysts?
Turning to Wall Street, MAT stock comes in as a Strong Buy based on three unanimous Buy ratings. The average Mattel stock price target is $24, implying 15% upside potential.
Conclusion: Should You Consider Mattel Stock?
Chances are pretty good that you haven’t spent much time thinking about whether you should invest in Mattel. Now’s a great time to think about it, though, as Barbie fever is in full effect, and Mattel’s top and bottom lines are about to get a major boost.
So, don’t dismiss Mattel as child’s play. Plenty of adults will be monitoring the Barbie film’s impact on Mattel’s financials, and right now is a good time to consider starting a long position in MAT stock.
