Zacks Investment Research downgraded shares of Mattel, Inc. (MAT) from NEUTRAL to UNDERPERFORM on August 29, 2014, with a target price of $32.00.
We downgrade our recommendation on Mattel to Underperform from Neutral due to dismal second-quarter 2014 results. Adjusted earnings of $0.03 per share missed the Zacks Consensus Estimate of $0.19 per share by 84.2% and also declined 85.7% year over year. The significant downside was due to weak sales and lower margins. Net sales of $1.06 billion declined 9% year over year and also missed the consensus mark by 8.8%, reflecting poor performance in the domestic as well as international markets. Sales of Barbie and Fisher-Price dropped significantly during the quarter. In fact, both these flagship brands have been posting soft sales since 2013 due to a weak consumer spending environment that has compelled customers to reduce their non-essential purchases. Moreover, the company intends to increase marketing and advertising spending in the second half of the year, which will further dent profitability.
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