Shares of Mattel (MAT) slipped in afternoon trading after an analyst from Jefferies said the toy maker's capital needs are "immediate" and "growing." Separately, an analyst at UBS cut his price target on the shares, saying that he views the toy giant as a top-line recovery story, not a cost cutting one, and that Mattel cannot save its way to a turnaround.

MATTEL's CAPITAL NEEDS 'GROWING AND IMMEDIATE': After Standard & Poor's downgraded Mattel's debt two notches to junk following downbeat third quarter results, Jefferies analyst Stephanie Wissink said yesterday that the toy maker's capital needs are "growing and immediate." The analyst believes that a lack of access to the commercial paper market and Mattel's limited debt capacity leaves the company with limited options to fund its operations. Wissink argued, however, that the company can exercise an open shelf or possibly sell off assets, but noted that the firm is taking a "conservative" approach to the sales recovery and post-investment cost savings. The analyst maintained a Hold rating and $12.50 price target on the stock.

MATTEL CANNOT SAVE ITS WAY TO A TURNAROUND: Before today's market open, UBS analyst Arpine Kocharyan maintained a Buy rating on the stock but cut his price target to $18 from $22, reaffirming his view that Mattel is a top-line recovery story, not a cost-cutting story. The analyst said that a company cannot save its way to a turnaround, as acceleration in top line growth is necessary. Kocharyan acknowledged, however, that that there are costs to slash if the top line does not come back, even though investors would prefer for margins to improve through a better top line.

EARNINGS MISS: The analysts' commentary follows Mattel's bleak Q3 results, in which its earnings per share of 9c and revenue of $1.56B missed greatly on both the top and bottom line as analysts expected the company to report Q3 EPS of 59c on revenue of $1.82B. The company said that its sales performance in the quarter was negatively affected by Toys 'R' Us filing for bankruptcy, tighter retailer inventory management, and challenges with certain underperforming brands. The company added at the time that its board opted to suspend the company's quarterly dividend beginning in the fourth quarter of 2017 in an effort to increase financial flexibility, strengthen the balance sheet and facilitate strategic investments.

PRICE ACTION: In afternoon trading, Mattel is down about 9.5% to $14.10. Shares are down nearly 49% year-to-date.