Sector Snap: Mattel weakness hurts toymaker shares
Toy companies fall as Mattel's 4th-quarter performance misses analysts' expectations
In this Tuesday, Jan. 28, 2014, photo, Hot Wheels cars, a Mattel product, are displayed in a Walmart store in Robinson Township, Pa. Mattel Inc. reports quarterly financial results before the market open on Friday, Jan. 31, 2014. (AP Photo/Gene J. Puskar)
NEW YORK (AP) -- Shares of toy companies are slipping in Friday trading after Mattel's results during the critical holiday quarter missed analysts' expectations.
Mattel Inc., the world's biggest toy maker, reported earnings of $1.07 per share on revenue of $2.11 billion for the three months that ended Dec. 31. Analysts polled by FactSet expected earnings of $1.19 per share on revenue of $2.37 billion.
Mattel said that Barbie and Fisher-Price sales both fell 13 percent. Hot Wheels sales declined 8 percent.
Drew Crum of Stifel Nicolaus said in a note to clients that all regions underperformed for Mattel, particularly North America, where revenue fell 10 percent.
"This was a disappointing end to 2013 for Mattel," the analyst wrote. Crum reiterated a "Hold" rating.
But there could be reason for optimism, Citi Investment Research's Gregory Badishkanian said.
The analyst expects Mattel's boys' product line should benefit this year from Max Steel's second season airing on the Disney XD cable channel in the spring, as well as from a sequel to Disney's "Planes" movie.
Badishkanian said that in October Mattel was upbeat about its 2014 girls' products, driven by Monster High and Barbie. He said that the company was also optimistic about Ever After dolls and products tied to Disney's "Frozen" movie.
"While it is early, based on conversations with our industry contacts, we think Mattel's overall upcoming 2014 holiday product lineup should be pretty decent," Badishkanian said.
The analyst maintained a "Buy" rating and $52 price target.
Mattel's stock dropped $3.92, or 9.1 percent, to $39.09 in morning trading.
Elsewhere in the sector, shares of Hasbro Inc. fell $1.62, or 3.2 percent, to $49.22. Jakks Pacific Inc.'s stock shed 4 cents to $5.83 per share.
