Mattel Stock Surges on Sales Surprise

Mattel reported second-quarter earnings and revenue that beat analysts' estimates

The shares of toymaker Mattel Inc (NASDAQ:MAT) are surging this morning, ready to tack on their fourth consecutive win after the firm's second-quarter results came in atop analysts' estimates. The company reported a loss of 25 cents that topped the 40 cent loss expected by analysts, and $860 million in revenue, higher than the expected $812.95 million. Mattel said its increased demand for action figures, especially following the recent "Toy Story" movie release and changes to its Barbie line helped boost revenue. The stock is up 6.5% at $13.33, in response.

Despite the earnings beat, D.A. Davidson slashed its target price by 50 cents to $13. Now the equity sports a consensus 12-month target price of $14.04, which represents just a slim premium to its current perch. Analyst sentiment has been wary too, with five "holds" on the table and two "sells." Should MAT continue to rally, however, a round of upgrades could put some wind at the security's back.

Taking a closer look at the charts, MAT has rallied hard off its five-month low of $9.59, now up nearly 39%. The stock initially ran out of steam at its 60-day moving average, but a familiar area of support at the $10.50 area acted as a springboard in late June. Now, the equity is eyeing its first close atop its 200-day moving average since March.

While short sellers have started to hit the exits -- short interest dropped 3.2% in the last two reporting periods -- the 69.26 million shares sold short still account for a hefty 20.2% of the stock's available float. What's more, it would take nearly nine days to buy back these bearish bets, which could propel MAT even higher, should some of these pessimistic positions continue to unwind.