Jefferies has raised its recommendation on Mattel from 'hold' to 'buy', with a price target raised from $20 to $28, following a strong quarterly publication, accompanied by a positive sales growth forecast for 2025.
Mattel should benefit from the expansion of its entertainment offering, wider distribution and new collaborations, enabling the franchise to grow as much as, and potentially more than, the 3.5% increase in the toy market", he believes.
The broker also believes that the company's return to growth could lead to a re-rating of its shares towards its five-year average EV/EBITDA ratio of nine times (versus seven times currently).
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Mattel, Inc. is a global toy company and owner of catalogs of children's and family entertainment franchises. The Company's operating segments include North America, International and American Girl. The North America and International segments sell products across its categories, although some products are developed and adapted for particular international markets. The American Girl segment is a direct marketer, retailer, and children's publisher. Its product categories include Dolls; Infant, Toddler, and Preschool; Vehicles, and Action Figures, Building Sets, Games, and Other. Its brands include Barbie, Hot Wheels, Fisher-Price, American Girl, Thomas & Friends, UNO, Masters of the Universe, and MEGA, as well as other intellectual properties that it owns or licenses in partnership with global entertainment companies. Its offerings include film and television content, gaming and digital experiences, music, and live events. Its products are available in more than 150 countries.
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