Investing.com – Mattel rallied on Monday, as investors bet that record box office revenue for the hit film "Avengers: Engame" would ramp up sales of the toy-maker's Avengers toys.
"Avengers: Endgame" hauled in $1.2 billion in global ticket sales in its opening weekend, raising expectations for sales of ancillary products. Mattel (NASDAQ:MAT) shares jumped more than 5% Monday. They're up 26% this year after falling 35% in 2018.
The fanfare is unlikely to fade any time soon, with analysts touting the prospect of "Endgame" becoming the highest grossing film of all time.
“When considering that international box office proceeds generated 67% of ‘Infinity War’s’ ultimate world-wide box office take, we believe 'Endgame could be positioned to generate $2.7 billion to $3.5 billion in ultimate world wide box office,” Bank of America analyst Jessica Reif Ehrlich wrote in a research note Monday.
The rally in Mattel comes less than a week after Mattel reported a narrower-than-expected loss in the first quarter and revenue that beat estimates from analysts polled by Investing.com.
The better-than-expected results were led by strong sales of Barbie dolls and a parade of toy-related films that hit theaters and energized sales of Mattel's "Jurassic World" and "Toy Story" toys.
But not everyone is backing the toy maker amid concerns over top and bottom line growth.
"(W)e prefer to stay on the sidelines until we see sustainable top and bottom line momentum," said CFRA, an independent research provider.
Others have outlined the reputation risk from the company's recent recall of its Rock 'n' Play Sleeper as a concern. About 4.7 million units were recalled.
"We estimate full cash refund for six month ownership of ~$18 million to $22 million, assuming a 100% redemption rate," wrote UBS analysts led by Arpine Kocharyan. “We estimate an additional $20 million to $40 million of voucher redemption exposure." That projection was based on a 50%-to-100% redemption rate, UBS said.