Why Mattel Is Down 30% While Hasbro Is Up 30% in 2017

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Why Mattel Is Down 30% While Hasbro Is Up 30% in 2017

By Shoshanna Delventhal | June 17, 2017 — 2:17 PM EDT

U.S. global toy maker Mattel Inc. (MAT) saw its stock take another hit this week as its newly instated Chief Executive Officer (CEO) Margo Georgiadis unveiled plans to revive sales by slashing the company’s dividend in half to support its modernization in the digital age and expand into emerging markets.

Shares fell nearly 8% on Thursday as analysts rubbed salt in the wound in a series of bearishresearch notes. In the aftermath, MAT stock reflects an approximate 30% loss so far this year compared to a 30% return secured by its top U.S. toy rival, Hasbro Inc. (HAS). (See also: Mattel Tanks as It Slashes Dividend to Fund Turnaround Plan.)

Applauding Hasbro’s Diversification

D.A. Davidson analyst Linda Bolton offered a downbeat view on Mattel given the El Segundo, Calif.-based company’s “deteriorating near-term business fundamentals.” Bolton downgraded MAT to neutral and cut her price target from $30 to $24 per share, compared to a Friday close at $20.72.

UBS also downgraded shares of the struggling toy maker on concerns over a lack of specifics in the CEO’s turnaround plan that she hopes to fund. Analyst Arpiné H. Kocharyan suggests that Georgiadis’ presentation fell short of details, especially regarding Mattel’s recovery time and left questions regarding how its reinvestment plan will change the company’s profit profile next year.

Jefferies chimed in with another negative view, indicating that a lack of clarity means “a full de-risking of estimates in unlikely,” as the investment firm reiterated a hold rating on MAT and cut its price target to $19. Earlier this month, Jefferies named Pawtucket, R.I.-based Hasbro as their favorite toy player, echoing the Street’s sentiment that the firm will continue to gain from improving leverage, a strong digital focus and a pipeline of new content helping drive multiyear earnings per share (EPS)upside. (See also: A Tale of Two Toy Makers: Mattel and Hasbro.)

Published at Sat, 17 Jun 2017 18:17:00 +0000

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