Shares of toy manufacturer Mattel, Inc. (NASDAQ:MAT) are expected to jump higher as the release of the much-awaited and first-of-its-kind live-action movie, Barbie, approaches. An increase in the stock price could build a figurative “Barbie Dreamhouse” for Mattel’s investors.
The Barbie movie is scheduled for release on Friday, July 21. Since the announcement and trailer release of the movie aired in April this year, MAT stock has gained 16.5% while shares are up 19.9% year-to-date.
The creators took four and a half years to produce the “Barbie” movie, starring Margot Robbie and Ryan Gosling in lead roles. Mattel hopes the movie release will reignite the fandom and lost sheen of the Barbie franchise. Sales of the Barbie brand products have fallen since 2014, and Mattel struggled in the wake of the Toys R Us bankruptcy of 2017. Even so, as the pandemic kicked in, Mattel witnessed some momentum as demand from kids locked indoors boosted sales. In fact, the company has had several earnings beats in the past two years, as indicated in the table below.
In another positive sign, ticket sales for Barbie’s upcoming movie release have already garnered frenzy, with theaters like AMC Entertainment (NYSE:AMC) witnessing huge pre-sale numbers and some theaters even completely sold out of tickets for the movie. The film is produced by Mattel’s own production house, Mattel Films, and is being released by Warner Bros. In the future, Mattel seeks to produce many more movies based on Barbie and its other popular toy franchises, namely Hot Wheels and Fisher-Price. Mattel has also launched new toys in the Barbie portfolio in anticipation of toy sales seeing a boost from the movie’s success.
What Analysts are Saying About the Barbie Movie
Recently, Stifel Nicolaus analyst Drew Crum projected that the Barbie movie could make $400 million at the box office, up from his initial estimates of $325 million. The higher box office numbers could mean higher profits for Mattel. Crum noted, “Barbie is the first of several movie releases from Mattel Films, with a stated mission to be an IP-driven toy business, and thus we see a successful launch as driving greater confidence around this part of the company’s strategy.”
Similarly, Roth MKM analyst Eric Handler lifted the price target on MAT to $24 (11.9% upside) from $22 while maintaining a Buy rating. Ahead of the company’s Q2FY23 earnings scheduled for July 26, Handler said, “Mattel has also benefited from a strong product line-up fueled by Disney Princess and Barbie, ahead of the brand’s major movie release on July 21.”
What is the Forecast for Mattel Stock?
With three unanimous Buys, MAT stock commands a Strong Buy consensus rating. The average Mattel price target of $24 implies 11.9% upside potential from current levels.
