Analysts upbeat on Mattel following investor day

By Sam Boughedda

Mattel (NASDAQ:) hosted a virtual investor day on Wednesday, March 8, with the company reiterating its 2023 guidance, and analysts at DA Davidson and BofA remain positive on the stock.

DA Davidson analysts maintained a Buy rating and $23 price target on the stock in a research note Thursday, telling investors the toy industry is healthy, “as evidenced by MAT’s 4Q22 POS growth of mid-single digits, the highest level in eight years.”

“MAT held a virtual analyst meeting, and they reiterated their 2023 guidance for sales flat in constant currency, EPS of $1.10-$1.20, and free cash flow (FCF) of >$400M,” the analysts wrote. “The retail inventory glut should be resolved by 3Q23, and MAT shares are cheap, with a 7% FCF yield and share repurchase resuming this year.”

BofA analysts said MAT continues to expect the toy industry will be flat to slightly up and grow thereafter.

“Mgmt. did not provide long-term targets but did announce that MAT has begun repurchasing shares,” said the analysts, who have a Buy rating and a $21 price target on the stock.

“Mgmt. said MAT still has $200mn remaining on its authorization (vs. $203mn as of Feb 8th per MAT’s 10-K) indicating that the repurchases have just begun. We expect investors will likely view the repurchase announcement favorably. MAT’s credit was upgraded to investment grade by Moody’s last year but has not yet been upgraded by S&P or Fitch,” they added.