Mattel bounces on Goldman upgrade

Shares in Mattel were buoyed after analysts at Goldman Sachs upgraded the toymaker behind Barbie and Hot Wheels, as they said the company is refocusing on innovation and is now building partnerships with Hollywood and Silicon Valley.

The number of Mattel bulls on Wall Street climbed to five on Friday, according to Bloomberg data, after analysts at Goldman Sachs upgraded the stock to "buy" from "neutral" and raised the price target to $37 from $26.

In recent years, Mattel has faced increasing competition from smaller upstarts and electronic gadgets. But Taposh Bari, an analyst at Goldman, said the new management has acknowledged "the need to change by returning to a culture rooted in creativity and invention". The company has "expressed a renewed determination to create blockbuster theatrical content", they added.

"Our underlying thesis is that the "toy industry" is evolving from a legacy vendor model into part of a larger ecosystem integrated with media and technology," Mr Bari said. He added that Lego, which recently announced dates for three new Lego movies, and Hasbro have adapted well to this change and that Mattel is now catching up.

The El Segundo, California-based company has already entered into partnerships with Google, Nickelodeon, DC Entertainment and YouTube this year.

Mattel shares, which declined more than 20 per cent in the past year, gained more than 3 per cent to $29.94.

Better than expected first-quarter results buoyed shares of Starbucks, the world's largest coffee chain.

The Seattle-based company reported a 16 per cent rise in profits to $495m, or 33 cents per share, in the three months to the end of March from a year earlier, as traffic at its stores climbed and the company took greater control of its Japanese business. Sales rose 18 per cent to $4.56bn.

Wall St analysts expected the Seattle-based company to report earnings of 32 cents a share and sales of $4.53bn.

Same-store sales climbed 7 per cent in the period, ahead of forecasts for a 5 per cent gain.

Sales in the Americas advanced 11 per cent from the same period a year ago, offsetting a 10 per cent fall in revenues in Europe, the Middle East and Africa that were hit by the strong US dollar.

In China and Asia Pacific sales jumped 124 per cent, largely a result of Starbucks taking increasing control of its Japanese business.

Starbucks shares gained 4 per cent to $51.40.

Amazon shares jumped 14 per cent to $444.39, after the ecommerce giant topped revenue forecasts as investment in its data centre business began to pay off. The rally added more than $27bn to Amazon's market valuation, which now sits at $209bn.

Sales in Amazon Web Services, a fast-growing technology business that rents out computing power and software services to IT professionals, climbed 30 per cent from the previous year to $1.6bn. Overall sales rose 15 per cent to $22.7bn.

Technology stocks rallied after Microsoft and Amazon reported results, while US stocks fluctuated near record levels.

The S&P 500 rose 0.1 per cent to 2,114.88, the Dow Jones Industrial Average was little changed at 18,043.31. The Nasdaq Composite rose 0.7 per cent to 5,089.45.

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