Investing.com -- Target Corp highlighted toys and beauty as standout categories in its holiday sales update, following which DA Davidson named Mattel Inc (NASDAQ:MAT) and e.l.f. Beauty (NYSE:ELF) Inc as its top picks in these segments, on strong fundamentals and growth prospects.
Target (NYSE:TGT) reported a "meaningful acceleration" in discretionary categories such as toys and apparel, alongside continued strength in beauty during the holiday season.
DA Davidson reiterated a "Buy" rating on Mattel, with a price target of $27, as it sees Mattel an attractive value play. In contrast, Hasbro Inc (NASDAQ:HAS), rated "Neutral" is less compelling due to its heavier focus on gaming rather than toys.
DA Davidson noted that Target’s toy shelves appeared more depleted than Walmart (NYSE:WMT)'s, particularly in categories like Barbie and action figures, signaling robust demand.
In beauty, DA Davidson sees e.l.f. Beauty as a leader, maintaining a "Buy" rating with a price target of $170. With about 25% of its sales linked to Target, e.l.f. continues to post strong growth, including a 20% year-over-year increase in U.S. channel sales for the December quarter.
Analysts also highlighted e.l.f.’s international expansion and strategic pullback from lower-margin holiday gift sets, which are being replaced by more prominent product displays at key retailers.
As the toy and beauty sectors gain momentum, DA Davidson expects Mattel and e.l.f. Beauty to deliver sustained performance, with upcoming earnings reports offering potential upside surprises.