Mattel (MAT) remains in the early stages of fully monetizing its intellectual property but its substantial operating expense investment on digital gaming is set to delay near-term EPS growth, UBS said in a Wednesday note.

The company's acquisition of full ownership in mobile games studio Mattel 163 is set to close by the end of Q1, and the integration with its digital games business is expected to create sizeable scale, UBS analysts said. With content licensing and digital games anticipated to be an important driver of margins, Mattel aims to soft-launch two games in H1, the analysts said.

The analysts revised their 2026 EPS estimate Mattel to $1.23 from $1.72, mainly from the operating expense investment of $0.37 in digital gaming, while the 2027 EPS estimate is $1.71, above the consensus of $1.51 and driven by a slightly higher margin.

UBS also forecasts 2026 revenue growth at 4.1%, with 2.8 percentage points from the partial-year contribution of Mattel 163, and 2027 revenue growth at 2.8%, with 90 basis points from the full-year impact of the mobile games studio.

UBS maintained the company's stock rating at buy and reduced the price target to $28 from $30.

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