Mattel shares suffer after Goldman downgrades to…

Barbie maker Mattel saw its shares skid Tuesday after Goldman Sachs downgraded its rating on the toymaker to sell.

Shares of Mattel sank 65 cents, or 1.4%, to $45.97 in midday trading Tuesday as investors reacted to Goldman taking its rating down from a neutral. The selling interrupts what had been a solid year for the stock, including a 30% gain in 2013. Mattel has been enjoying strong sales of its Monster High and American Girl dolls, not to mention better performance from its marquee Barbie brand.

But Goldman is calling for an end to the strong performance. Most concerning is the fact Goldman says its research into toy sales indicate Mattel could miss Wall Street's forecasts for sales and earnings in the critical fourth quarter. By losing market share for toy dollars, analysts will likely lower their 2014 forecasts, writes Michael Kelter, Mattel analyst at Goldman. Mattel is expected to report the quarter on Jan. 31, 2014.

Analysts are currently calling for Mattel to earn $1.21 a share in the fourth quarter, says S&P Capital IQ, although Goldman is looking for a profit of $1.14 a share. Analysts are looking for adjusted earnings per share from Mattel for 2014 of $3.03 a share, up 11% from 2013's estimate.

On the product side, the popularity of Monster High dolls, a big driver in past results, is "peaking" and the improvements in the Fisher Price toddler toy category are stalling, Goldman says.

Goldman is maintaining a $40 12-month price target on the stock. That valuation is 14 times the firm's forward earnings estimate, a P-E that is roughly equal to the company's long-term multiple.

If there's a way for Mattel to escape this negative forecast it's the company's lucrative American Girl franchise, Goldman says. The American Girl doll unit is a generator of rich profit margins, and if Mattel can expand the concept faster internationally that could reduce the hit from slowness in other parts of the business, Goldman says.

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Goldman is on the negative side relative to the other 12 Wall Street analysts with current forecasts on the stock. The average rating on the stock is outperform and the median price target is $48 a share, says S&P Capital IQ.