In a new research note on Tuesday, Stifel analyst Drew Crum estimated the "Barbie" movie could haul in $400 million at the box office. Crum's previous sales estimate stood at $325 million.
"We think anticipation leading up to its July 21 theatrical release creates a near-term trading opportunity," Crum wrote. "Why? Because 1) Barbie is arguably the company's most important brand; 2) Barbie is the first of several movie releases from Mattel Films, with a stated mission to be, 'an IP-driven toy business,' and thus we see a successful launch as driving greater confidence around this part of the company's strategy; and 3) a higher box office = higher profits for Mattel ~ since the company did not fund production our estimates (including adj. EPS = $0.08) are admittedly modest, but a stronger showing in theaters certainly can't hurt numbers."
The analyst maintained a Buy rating on Mattel's stock.
Mattel's "Barbie" movie is a live-action flick headlined by Margot Robbie as Barbie and Ryan Gosling as Ken. It was directed by Greta Gerwig, and reportedly had a budget of up to $100 million to make.
"That will be a catalyst," Kreiz said on Yahoo Finance Live at the 2023 Milken Institute Global Conference (video above). "This is the first time that Mattel is putting a movie out based on any of our [intellectual property], any of our franchises. Barbie is clearly an important brand. It's one of our three power brands, and it will be in many ways a showcase for the quality of the movies that we're looking to make, the type of partnerships we're formulating with lead talent in Hollywood, working with major studios."
Kreiz said that Mattel has 14 content projects in development including a Warner Bros. movie based on toy car brand Matchbox.
So for Mattel, a lot is riding on the "Barbie" movie, and it comes at a critical time financially.
The movie is slated to arrive as Mattel's stock price has lost 25% in the past year as consumers pulled back on discretionary items amid record-high inflation and a slowing economy.
Mattel's first quarter sales fell 22%, and the company said it was still working to clear excess inventory. The company posted an $86.7 million adjusted operating loss in the first quarter, down sharply from a $90.1 million profit a year earlier.
"Management sounded confident inventory was being worked down in line with expectations, second half would 'return to normal', and green shoots abound in the toy industry," Jefferies analyst Andrew Uerkwitz said after Mattel's quarter. "We somewhat agree when looking at Mattel share gains, execution, and resilient categories like wheels, but continue to worry about point of sale and heavily-weighted second half to hit guidance."