Mattel Inc. (NASDAQ: MAT) reported its third-quarter earnings after the markets closed on Thursday. Sales came in below what one key analyst was expecting, mainly due to a sales shift from the third quarter into the fourth quarter and an adverse foreign exchange (FX) impact. As a result, Oppenheimer maintained its Outperform rating and $27 price target.

Positive trends in many Mattel core brands continue to encourage Oppenheimer that the turnaround is working and an inflection point may be near, which would help fill what it called the princess gap in its report. Reported earnings per share was exactly in line with expectations, and those earnings, excluding one-time items, beat the firm’s expectations by five cents per share. Mattel’s affirmation of its dividend again also signals that management is committed to maintaining the current dividend (and that matters at over a 6% yield).

Net revenues were down 2.2%, mainly due to FX ($50 million drag on sales) and a sales shift from direct import purchases to the fourth quarter (roughly $30 million to $40 million). Oppenheimer believes that sales would have been in line with its expectations and, excluding both of these items, would have exceeded estimates. Management is confident that the shift will be recaptured in the fourth quarter.

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Mattel’s board voted to maintain its dividend and Oppenheimer believes this reaffirms the company’s desire to continue paying the dividend. Management noted that the dividend is top priority, after making necessary investments in the business. While the firm expected this, it believes some investors remain apprehensive that it may be cut.

The company gave a slightly higher-than-expected outlook on gross margin in its report. This higher margin is attributable to cost-cutting efforts, including productivity improvements, automation and re-engineering top SKUs to be leaner.

Oppenheimer raised its fourth-quarter EPS estimate to $0.66 from $0.56, primarily driven by higher assumed gross margins. The consensus estimate from Thomson Reuters calls for $0.60 in EPS.

Shares of Mattel were up 5.2% to $23.70 Friday afternoon, with a consensus analyst price target of $26.70 and a 52-week trading range of $19.45 to $31.91.

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