RESEARCH ALERT-Salomon ups Mattel to buy
NEW YORK, May 17 (Reuters) - Salomon Smith Barney analyst Jill Krutick on Wednesday upgraded Mattel Inc. <MAT.N> to buy from neutral and said the company's hiring of Kraft Foods Inc. CEO Robert Eckert as its new chief was good news.
-- said that "we believe the company is on the threshold of more positive change."
-- said of the hiring of Eckert, "We view this move very favorably in that it addresses at least one critical issue overhanging the stock."
-- "Taken together, we feel this appointment is a sign of happier times at Mattel. The stock is very washed out, implying little downside risk to the stock, (The Learning Co.) will be sold, new strategies will be laid out, and we think the stock can bounce into the mid-teens just on additional positive news."
-- "We are carrying a $16 price target on Mattel but recognize that there could be significantly more upside if the turnaround really works."
-- "For example, if the stock returned to its historical average low of a 15 percent discount to the market, this would imply a 19.5 times multiple suggesting the stock could approach $20 per share."
-- said Eckert's attributes include "a very solid track record in a significantly larger consumer goods business, known as a strong, consistent, operating manager of many diverse businesses, positive reputation with the trade, the Street, and in building morale internally, an eye toward cost cutting, he is recognized as a creative marketer, experience mostly focused on North America, with less global exposure."
-- said Eckert's negatives include, "Cheese, while a consumer product, is very different than toys, which can be fad-driven, Eckert lacks significant international experience, a trouble spot for Mattel, basic toy business is facing numerous fundamental challenges including shifting market preferences (shrinking demand in core product areas), retailer just-in-time pressures, international product cycle challenges and market penetration issues."
-- said Mattel faces a great number of internal challenges: It has a bare-bones executive team (openings include: head of manufacturing, international, chief operating officer) and inconsistent performance in its core brands; its interactive strategy has been stalled and even set back by the woes that The Learning Co. created; sale of The Learning Co. is still pending and the ultimate value Mattel derives from this could also have a bearing on Mattel; numerous shareholder suits are still pending.
-- Mattel shares were up 1 at 12-5/16 in morning trade on the New York Stock Exchange.
11:16 05-17-00 |
