Options Bears Eye Mattel Stock Despite Barbie Sales Boost

No fewer than six firms lifted their MAT price targets today

Assistant Editor
Feb 10, 2021 at 11:02 AM
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The shares of Mattel Inc (NASDAQ:MAT) are slipping today,  down 5.8% to trade at $17.80 at last check and on track for its worst single-session drop since June 11.. This comes despite the toymaker reporting fourth-quarter earnings of 40 cents per share, higher than the 23 cents anticipated by analysts, alongside better-than-expected revenue. Barbie sales gave Mattel the biggest boost, with worldwide gross billings rising 19%, followed by Hot Wheels. Rival Hasbro (HAS) also reported similar success during this coronavirus-ridden holiday period. Furthermore, the company announced a cost-cutting program aimed at saving around $250 million by 2023. 

In response, no fewer than six analysts raised their price targets, with the highest from D.A. Davidson to $23. However, there is still plenty of room for upgrades amongst the brokerage bunch. Of the 11 analysts in coverage, six carry a "hold," rating, with five a "strong buy."

After its Jan. 13 three-year high of $19.42, MAT has cooled off a bit on the charts, rejected by the $19 level during its recent rally attempts. Down 5.3% at $17.86 at last check, the drop is so far being contained by its 50-day moving average, a trendline that hasn't been breached on a closing basis since September.

Options traders are responding in kind. Nearly 7,000 contracts have crossed the tape already, volume that is nine times the average intraday amount. New positions are being opened at the weekly 2/12 19-strike put, but the January 2022 3-strike put is the most popular, indicating LEAPS traders are positioning for the long term.

Now may be a good time to weigh in on Mattel stock with options thanks to a post-earnings volatility crush. The stock's Schaeffer's Volatility Index (SVI) of 77% stands higher than just 8% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment.

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