Toymaker Mattel can shine even as the environment for consumer companies looks shaky, according to Morgan Stanley. Analyst Megan Alexander initiated Mattel with an overweight rating, calling it a top pick, and assigned the the stock a price target of $27. That suggests the stock could gain 27.2% over the next 12 months. Alexander noted that headwinds reflecting the tough macroeconomic outlook are partly priced into the stock, but that revisions haven’t bottomed yet. Mattel still offers some of the best risk-adjusted returns, she said. “MAT is trading well below historical levels, and we expect the stock to re-rate on both an absolute and relative basis as (1) revisions turn positive, (2) it proves resilient in a deteriorating macro, and (3) it monetizes its strong IP in the wake of the Barbie movie.” Alexander wrote in a Wednesday note. Morgan Stanley’s 2023 and 2024 earnings-per-share estimates for Mattel are 11% and 8%, respectively, above consensus, driven by gross margin and benefits from higher capital returns with the company’s stronger balance sheet and accelerating free cash flow. Shares of Mattel rose 1.9% in premarket trading. The stock has soared nearly 19% this year, boosted by the success of its live-action “Barbie” film which topped $1 billion globally at the box office. To be sure, the analyst pointed to three headwinds for topline growth for companies like Mattel: Negative unit trends Ongoing share-of-wallet reversions Moderating price tailwinds “Our economists forecast that consumer spending will slow, noting that the expiration of the student loan moratorium will weigh on discretionary spend into 2024,” Alexander said. “They expect a decline in goods consumption, in particular durable goods, and a deceleration in services consumption.” — CNBC’s Michael Bloom contributed to this report.