Roth MKM Downgrades Mattel Stock Based on Cautious 2024 Growth Outlook

Summary

  • Roth MKM downgrades Mattel from Buy to Neutral, lowering the price target to $20 from $24 per share.
  • The firm cites a more cautious 2024 growth outlook for Mattel and suggests consensus expectations for the year are too high.
  • Barbie, a Mattel product, is expected to face challenging comparisons without significant growth catalysts for 2024.
  • Roth MKM reports increased shelf space for Mattel products during the holiday season, with relatively high inventory levels.
  • Elevated retail inventories for some brands at quarter-end suggest a period of adjustment needed in early 2024.

On Thursday, Roth MKM changed its perception of Mattel’s (NASDAQ:) stock to Neutral from Buy, adjusting its price target to $20 from the previous $24 per share.

Justifying their downgrading of the company’s shares, the analysts at the firm expressed concerns over Mattel’s cautious 2024 growth projections. It is worth noting that early Thursday trading saw Mattel’s shares dipping by over 2%.

As per Roth MKM, Mattel ended 2023 with surplus inventory in retail stores, this is expected to impact the first-half result of 2024, albeit the extent will be less than that in 2023.

Challenges Ahead for Barbie

Moreover, the firm expressed concerns about Barbie, a Mattel product, facing difficult comparisons and lacking in significant growth factors. As a result, their estimates for 2024 have been revised down.

Evidence from their in-store checks during the holiday season affirmed that Mattel had claimed a larger shelf space and that inventory levels remained high as Christmas was drawing nearer.

Retail Inventories for Brands May Need Adjustments

The firm also shared that some brands had high retail inventories towards the end of the quarter, suggesting a need for adjustments in early 2024.

From a forex and trading perspective, fluctuations in Mattel’s shares could impact investors’ strategies and the overall dynamics of the stock market, particularly those who hold trades in NASDAQ-listed assets.

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