Mattel Analyst Sees Hot Wheels Growth While Barbie Faces Mixed Outlook

J.P. Morgan analyst Christopher Horvers reiterated a Neutral rating on the shares of Mattel Inc MAT and maintained the price forecast of $23.

The 2025 guidance from Mattel exceeds Wall Street expectations for revenue and slightly raises bottom-line estimates, driven by a favorable industry outlook and potential market share gains, the analyst said.

The company is forecasting net sales growth of 2% to 3% (constant currency), a gross margin of around 50.9%, and earnings per share (EPS) between $1.66 and $1.72, compared to the Street's projections of a 3% sales growth, a 50.4% gross margin, and $1.59 EPS.

The forecast accounts for the impact of tariffs, related mitigation actions and increased investments in the self-publishing digital games sector.

Mattel remains optimistic about the toy industry, expecting a stable to slightly improved market in 2025, alongside a return to more typical patterns in the theatrical market.

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The company anticipates strong market share growth, with continued success in its Hot Wheels and Challenger categories, an uptick in Barbie sales, growth in the Infant/Toddler/Preschool segment, and new entertainment product launches.

Despite a decline in point-of-sale (POS), the company's fourth-quarter sales surpassed expectations, increasing by 3% (constant currency), with gross billings also up by 3%.

Looking ahead, management indicated a positive start to first-quarter POS but acknowledged that slightly elevated channel inventory at the start of the year may present a near-term challenge, though they do not anticipate this extending beyond first-quarter or leading to markdown risks.

Overall, the company expects relatively flat sales year-over-year for first-quarter. Thus, the analyst is projecting a slight decline in first-quarter net sales of -0.6% (with Barbie down 7%, Hot Wheels up 2%, and Fisher-Price up 2%) and a 1.7% increase in FY25 net sales (Barbie down 2%, Hot Wheels up 4.5%, and Fisher-Price up 2%).

Overall, the company's sales performance exceeded expectations, showing significant upside in gross margin. The guidance for 2025 is favorable, even with the potential impact of tariffs, and the sales environment looks slightly improved, concluded the analyst.

Price Action: MAT shares are trading higher by 14.6% at $20.72 at last check Wednesday.

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