Mattel initiated with a Buy at Citi

Citi analyst James Hardiman initiated coverage of Mattel with a Buy rating and $26 price target. Mattel has “struggled to turn the ship around” for the better part of the last decade across a string of CEOs and through major customer bankruptcies, supply chain disruptions, lost licenses, secular pressure from digital entertainment, and most recently the de-stocking of inventory at retail, the analyst tells investors in a research note. The firm admits the risk of calling the bottom too early, but sees “early green shoots of the turnaround,” most notably a rightsizing of the cost structure and a meaningful deleverage of the balance sheet. While industry holiday demand is a concern, Mattel “may see a spark” through the combination of the return of Disney Princess, strong vehicle momentum, and an added lift from the Barbie movie, contends Citi.