Morgan Joseph Downgrades Mattel (MAT) to Hold; Valuation Call
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Morgan Joseph downgrades Mattel (NYSE: MAT) to Hold.
Morgan analyst says, "Retailers remain cautious; weak Q3 sales expected - roughly in-line. Mattel's Q3 sales declined 8% (3% negative impact from f-ex) Y/Y, roughly in-line with our estimate. U.S. and international sales declined 2% and 14% (5% negative f-ex impact), respectively...All things appear a go for a strong 2010; continue to expect 20% plus Y/Y EPS growth. YTD, Mattel's GCL program has reduced costs by $73mm and appears on track for annualized savings of roughly $195mm by 2010 year end. Strong free cash flow should continue to improve upon the company's balance sheet. Easier comparisons, particularly f-ex, coupled with the Toy Story 3 movie release and new 2010 licenses associated the WWE, Thomas and Friends, and potentially a Mattel owned Bratz line should reestablish a trend of solid top- and bottom-line growth...Expected 2010 strength appears reflected in the stock price: While we remain bullish on Mattel's future prospects and continue to expect strong sales/EPS growth, Mattel's share price has exceeded our price target and currently trades in-line with its historical multiple. Therefore, we are lowering our rating to Hold from Buy on valuation."
To see more analyst ratings on MAT Click Here.
Mattel, Inc., together with its subsidiaries, engages in the design, manufacture, and marketing of various toy products worldwide.
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