DA Davidson has reduced its price objective on Mattel Inc. to $18.00 from $25.00 but preserved a Buy recommendation on the toy company’s shares. The revised target still sits above the stock’s recent trading level of $15.89, and available market valuation metrics indicate the share price may be trading below its assessed Fair Value.
The analyst action followed Mattel’s fourth-quarter earnings release, which DA Davidson characterized as a "big miss." According to the firm, replenishment orders from retailers stalled in December, triggering an inventory-clearing phase that affected both Mattel and its retail partners. The company’s reported results and commentary prompted the broker to lower its upside expectation while maintaining conviction in the longer-term case.
Mattel’s balance-sheet liquidity was highlighted in the report, with a current ratio of 2.15 showing that the company’s liquid assets exceed its short-term liabilities by a comfortable margin. Despite that cushion, the company’s initial guidance for 2026 disappointed consensus on most metrics. Sales only matched forecasts after accounting for revenue tied to the acquisition of Mattel163, which had previously operated as a joint venture.
DA Davidson flagged the Mattel163 deal as the clearest bright spot in the update, interpreting the move as evidence of a strategic shift to bolster the company’s position in the digital segment. The broker noted, however, that the digital push is expected to weigh on near-term profitability because the company plans to incur incremental selling, general and administrative (SG&A) expenses through 2026 to support the transition.
On reported results, Mattel revealed Q4 2025 earnings per share of $0.39, falling short of the $0.54 analysts had anticipated - a 27.78% negative surprise. Revenue for the quarter was $1.77 billion, below the $1.85 billion consensus estimate and representing a 4.32% shortfall. Those misses prompted a decline in the company’s share price, with a modest recovery visible during aftermarket trading.
Investors and market participants will be watching how Mattel manages inventory dynamics with retailers, the pace and cost of the digital transition, and whether the company can translate the Mattel163 acquisition into sustainable revenue growth without eroding margins further. For now, DA Davidson’s adjustment reflects a more cautious valuation while stopping short of abandoning its Buy view.
Context and next steps
Management commentary and updated guidance will be critical in upcoming quarters as stakeholders assess how quickly replenishment orders normalize and how effectively Mattel executes on its digital strategy. The company’s liquidity position provides a buffer as it invests in SG&A for the digital pivot, but the immediate effect is a near-term profit headwind as outlined by DA Davidson.