Mattel is on a losing streak, this analyst says

Roth Capital Partners analyst Eric Handler says Mattel’s (Mattel Stock Quote, Chart, News, Analysts, Financials NASDAQ:MAT) entertainment strategy has taken a setback after the underperformance of Masters of the Universe.

In a July 14 update, Handler maintained his “Neutral” rating on Mattel and lowered his target to $15.00 from $16.00

Handler said meaningful investor interest in Mattel shares is likely tied to positive signs from its $150-million of strategic investments or success in entertainment. But he said the Masters of the Universe movie underperformed, likely forcing a reassessment of the brand’s growth potential.

“The Masters of the Universe movie will not generate any meaningful revenue for Mattel,” Handler said.

He said Mattel will likely receive only a nominal licence fee for the movie rights. With global box office revenue expected to finish below $115-million, and theatre owners taking about half of that gross, Handler said upside from movie economics is essentially gone, as is the likelihood of a sequel.

Handler also raised concerns about related toy sales, saying the movie skewed older and did not connect strongly with children. Opening-weekend data showed about 40% of the audience was over 45, while less than 5% was under 12.

“The movie significantly skewed to older moviegoers and lacked appeal among kids,” Handler said.

Handler said that makes a broad expansion of the brand unlikely, though collectibles could be a bright spot given the older audience.

The analyst also said Mattel’s first internally developed mobile game, MOTU Skeletor: Until Next Time, is unlikely to be a financial success. The launch showed Mattel can develop and release a mobile game, but early download activity appears weak.

For Q2 2026, Handler left his revenue estimate unchanged at $1.11-billion, up 9%, but lowered his operating income forecast to $34-million from $51-million and his EPS estimate to one cent from six cents.

He said revenue should be supported by Challenger Brands, including the consolidated Mattel163 mobile games business, Masters of the Universe and Mattel Brick Shop, along with continued growth from Hot Wheels.

Handler expects Mattel to generate Adjusted EBITDA of $873.1-million on revenue of $5.68-billion in fiscal 2026, improving to Adjusted EBITDA of $919.1-million on revenue of $6.08-billion in fiscal 2027.

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