A Hold recommendation has recently been issued to toy maker Mattel, Inc. (MAT) by Zacks leisure industry analyst Sean P. Smith. Here's what his latest update had to say:
'We maintain our Hold rating for MAT. Mattel has recently faced difficulties with respect to margin pressures and deterioration in some of its core brands. While results in the second half of '06 and the first half of '07 hinted at potential improvements going forward, the Q3 results provided evidence that challenges remain.
'Additionally, we anticipate that given the recent recall activity, investors will be unlikely to grant a higher multiple to shares of Mattel in the near-term, while waiting to see what impact, if any, the recall announcements have on future demand as we head deeper into this holiday shopping season. Our $23 six-month target price for Mattel is based on approximately 16x our 2007 earnings estimate.
'The major toy manufacturers as a group are currently trading at a P/E multiple of 13.6x 2007 earnings estimates, with Hasbro (HAS), the closest competitor, trading at 15.2x. The company has recently faced difficulties with respect to margin pressures and deterioration in some of its core brands. While results in the second half of 2006 and the first half of 2007 hinted at potential improvements going forward, the Q3 results provided evidence that challenges remain.'
Read the full analyst report on MAT.
Read the full analyst report on HAS.
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