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Mattel Inc. reports second-quarter results Wednesday, just days after the “Barbie” movie opened in a blaze of publicity, thrusting the toy maker’s famous doll into the global spotlight.
A marketing blitz has generated massive buzz for Warner Bros. Discovery Inc.’s
WBD,
“Barbie,” starring Margot Robbie and Ryan Gosling, with Mattel
MAT,
touted as one of the companies likely to benefit from the movie’s success. The toy maker has tapped into the recent “Barbie” mania, announcing a new product collection to celebrate the movie and a host of brand partnerships.
However, Stifel analyst Drew Crum sees inventory issues looming over Mattel’s results. “We’re forecasting another period of meaningful sales declines and losses, owing to excess retail inventory, among other factors,” he wrote in a note. “But results should reflect sequential gains and we expect to hear commentary supportive of fundamental improvement for the 2H [second half].”
Related: Barbie boost: These stocks could be in the pink amid movie buzz
Crum does not expect the recent “Barbie” buzz to have a meaningful impact on Mattel’s second-quarter results, but says that that could change. “Our estimates suggest only modest contributions to results ($0.10), though box-office forecasts for the film have continued to move higher, which could yield a more meaningful contribution, all else being equal,” he said in last week’s note. “But we remain constructive on MAT over the intermediate-term and keep our Buy-rating and $26/share target price objective.”
Mattel’s stock ended Monday’s session up 1.8% as “Barbie” generated a massive $162 million in North American weekend ticket sales, making it the year’s biggest movie opening. The S&P 500 index
SPX,
ended Monday’s session up 0.4%.
Analysts surveyed by FactSet are looking for Mattel to report a loss of 3 cents a share and revenue of just over $1 billion.
Related: From teen model to President Barbie: How Barbie changed through the decades
“Against the Barbie movie backdrop, we have not been super-pounding the table on MAT here because the 2023 guidance already builds in a very robust sales recovery in 2H23, following the work-down in retail inventory levels that occurred in 1H23,” wrote D.A. Davidson analyst Linda Bolton Weiser, in a note released last week. “MAT’s 2023 guidance already builds in a ‘hockey stick’ sales recovery in 2H23, and we don’t have visibility on what could cause MAT to greatly exceed the guidance.”
Nonetheless, the “Barbie” movie could potentially boost near-term toy sales, according to Bolton Weiser, as well as enhancing the brand’s long-term pop culture relevance. The movie may also increase Mattel’s brand licensing revenue, which is essentially 100% gross margin revenue for the company, according to the analyst.
“Barbie” could also provide an earnings boost related to Mattel’s portion of the “movie economics,” said Bolton Weiser. “No details have been disclosed on the structures of the deals, but management said they would give more info if the contribution to earnings is especially meaningful in any particular quarter,” she added. D.A. Davidson has a buy rating and $23 price target for Mattel.
Of 11 analysts surveyed by FactSet, nine have a buy rating and two have a hold rating for Mattel.
Mattel’s stock has risen 25.3% in the past three months, compared with the S&P 500 index’s gain of 10.1%.
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