2023-04-27 15:06:15 ET
S&P Global Ratings upgraded Mattel ( NASDAQ: MAT ) to a BBB- rating after factoring in the toy company's earnings report and guidance update.
The ratings agency said it is increasingly confident that Mattel's ( MAT ) recovery over the past few years is largely sustainable after the company reported strong underlying fundamentals for Q1 and market share gains in all three core product categories.
S&P expect retailers to start re-stocking shelves for the 2023 holiday season in the beginning of the second half of the year.
"We assume double-digit revenue growth in the second half of this year as Mattel will lap unusually low orders in 2022. Gross billings in the first half of 2022 were about 42% of total billings for the year. Typically about one-third of gross billings occur in the first half of the year and two-thirds in the second half."
The upgrade on Mattel ( MAT ) to BBB- or investment grade is key because it will trigger the fall away event and result in the release of collateral and all guarantees, resulting in a pari-passu position for all unsecured debtholders. The positive outlook on Mattel ( MAT ) from S&P is an indication the ratings could be bumped up one notch if the agency becomes confident MAT can sustain net leverage below the 2.5X upgrade threshold or the company sustains improvements in its business.
Shares of Mattel ( MAT ) rose 6.39% in afternoon trading on Thursday and crossed back over the $18 level.
More on Mattel:
- Review the highlights of Mattel's Q1 earings report
- Read breakdowns on Mattel from Seeking Alpha analysts
- View the growth metrics
- See the financial and valuation comparisons to sector peers
- Check out the Seeking Alpha Quant Rating
For further details see:
Mattel extends rally after S&P upgrades to investment grade