Mattel (MAT) Stock Forecast & Price Target

Mattel is expected to see a gross margin expansion of 100 basis points to 50.8%, driven by reduced royalty expenses and lower tariff impacts, highlighting enhanced profitability. The toy retail market has shown robust growth, increasing by 7% year-over-year to $27.5 billion in the first half of 2024, with retailer orders significantly rising as they adjust inventories to meet demand. Additionally, for the fourth quarter of 2025, Mattel forecasts sales of $1.86 billion, operating profit of $247 million, and earnings per share of $0.53, reflecting a strong performance with an overall full-year growth projection of 11% in key product categories.

Mattel is facing declining financial performance, with operating margins projected to decrease by 20 basis points to 12.2% due to increased advertising expenditures and employee compensation, compounded by a 12% drop in North American sales. The company's gross profits of $871 million fell short of the consensus estimate of $937 million, primarily impacted by rising advertising expenses and SG&A deleverage, in addition to an adjusted EPS of $0.89 that significantly underperformed the expected $1.06. Furthermore, operational profits amounted to $387 million, which is considerably below the consensus of $463 million, while Barbie revenues are trending lower than 2022, indicating persistent challenges in the toy industry amid expectations of a 5% decline in US retail for 4Q25.