Mattel (NASDAQ: MAT) shares have advanced more than 6% since the beginning of January, and the current share price stands around $19. Mattel reported better than expected Q4 results this February, and the company expects its position to strengthen even more in 2021.
Fundamental analysis: UBS assigned a buy rating on Mattel with a price target of $21
Mattel, Inc. is an American multinational toy manufacturing company that sells products in more than 150 countries. The company has proven stability in challenging market conditions, and shares of this company remain in a bull market.
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Mattel reported Q4 results this February; total revenue has increased by 10.9% Y/Y to $1.63B while Q4 GAAP EPS was $0.40 (beats by $0.16). Total revenue has increased above the expectations (+$50M), and the company expects its financial results to strengthen even more in 2021.
Revenues in the North America segment rose 13%, but it is also important to mention that international sales increased 7%. Adjusted gross margin was 51.4% of sales while Hot Wheels, Dolls, Action Figures, and Building Sets were the best selling products.
“This was a banner quarter for the company with our best performance in years. During a pandemic and very challenging market conditions, our results exceeded expectations, with another major upswing in topline and a significant increase in profitability, as we gained global market share and continued to transform Mattel into an IP-driven, high performing toy company,” said Chairman and CEO Ynon Kreiz.
Mattel also reported that it expects an EBITDA of $775M to $800M for 2021, and UBS assigned a buy rating with a price target of $21. “With Mattel targeting investment grade rating and leverage ratio in the 2x to 2.5x range, implied deleveraging could further add to an EPS in the $1.50 + range by 2023, ahead of Street’s $0.78 and our $1.13 estimate,” said analyst Arpine Kocharyan.
Technically looking, shares of this company could advance even more, but the risk/reward ratio is not good enough for “value” investors. Despite this, shares of Mattel could be a very good opportunity for short-term traders who are trading with “stop-loss” and “take profit” orders.
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Technical analysis: Bulls are in control of the price action
Mattel shares have been moving in an uptrend last several months, and for now, there is no signal of the trend reversal.
As long the price is above this trend line, this stock is in the “buy” zone, and there is no indication of the trend reversal. If the price falls on the trend line and if we get a “bullish” confirmation candle, it would be an excellent entry point for short-term traders who are trading with “stop-loss” and “take profit” orders.
The trend line represents a very strong support level, if the price breaks this trend line, it would be a very strong “sell” signal, and we have an open way to $15.
Summary
Mattel reported better than expected Q4 results this February, and UBS assigned a buy rating with a price target of $21. Technically looking, shares of this company could advance even more, but the risk/reward ratio is not good enough for “value” investors.
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