Mattel shares rise after the company reported better than expected Q3 results

Written by: Stanko Iliev
December 8, 2020
  • Total revenue has increased 10.1% in Q3 while Q3 GAAP EPS was $0.91
  • The company expects Net Sales and Gross Sales to grow in the fourth quarter
  • JPMorgan and UBS upgraded Mattel shares recently, but maybe now is not the best time for buying this stock

Mattel (NASDAQ: MAT) shares have advanced from $13.4 above $16 since the beginning of November, and the current price stands around $15.9. JPMorgan and UBS raised its price target for Mattel stock after the company posted better than expected results in Q3.

Fundamental analysis: Total revenue has increased by 10.1% in Q3

Mattel, Inc. is an American multinational toy manufacturing company that sells products in more than 150 countries. The most popular toy brands include Fisher-Price, Barbie, Hot Wheels, Thomas & Friends, among others.

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Mattel is the world’s second-largest toymaker in terms of revenue, and the company operates through three business segments: North America, international, and American Girl.

Mattel shares have advanced after the company reported better than expected Q3 results; total revenue has increased by 10.1% Y/Y to $1.63B while Q3 GAAP EPS was $0.91 (beats by $0.55). “Based on the POS momentum we are seeing, the low retail inventories, and the early start of the holiday shopping season, we expect Net Sales and Gross Sales to grow in the fourth quarter,” said Chairman and CEO Ynon Kreiz.

UBS has upgraded Mattel shares in November to a buy rating because of the stable growth trends for the Fisher-Price and American Girl brands. “We see room for consensus EPS to move up +40% higher for Q4′20/2021,” said an analyst from UBS.

JPMorgan also upgraded Mattel shares because its weaker brands have performed better than expected in Q3, and its stronger brands (Barbie, Hot Wheels) remain solid.

According to the latest news, the company has signed a multi-year global licensing agreement with PGS Entertainment for the upcoming animated preschool series. Mattel will create a full line of Fisher-Price toys under this agreement, which will be launch in 2022.

Shares of Mattel could be a good investment option, and the price is expected to rise considerably in the next several years. At the current market capitalization of $5.38B, this stock is not overvalued, but now is not the best time to buy Mattel shares because the price could weaken in the upcoming weeks.

The US stock market could enter the correction phase, and if this happens, Mattel shares will probably be at lower price levels.

Technical analysis: Bulls are focused on breaking the resistance level at $17

Data source: tradingview.com

When we look at the chart above ( one year period), we can see that this stock price has advanced from $6.5 above $16, and the current price stands around$15.9. The current support levels are $15 and $14; $ 16 and $17 represent the resistance levels.

If the price falls in the upcoming period, every price in a range from $10 – $12 could be a good opportunity to invest in Mattel shares. On the other side, if the price jumps above the $17 resistance level, the next target could be around $18 or even $20.

Summary

Mattel shares have advanced after the company reported better than expected Q3 results; total revenue has increased by 10.1% Y/Y to $1.63B while Q3 GAAP EPS was $0.91 (beats by $0.55). JPMorgan and UBS upgraded Mattel shares recently, but maybe now is not the best time for buying Mattel shares because the price could weaken in the upcoming weeks.