KeyBanc Reiterates Bullish Outlook On Yeti Despite Tariff Threat

Yeti Holdings Inc YETI shares are falling with the broader market Monday despite receiving a reiteration from KeyBanc.

The Analyst And Rating:

KeyBanc's Brett Andress reiterated an Overweight rating on Yeti with a $36 price target.

The Thesis

Andress says while tariffs likely remain an earnings and sentiment risk, Yeti is one of the better positioned amongst its peer group to mitigate risk.

“We believe the brand continues to resonate with consumers and we again view the raised guide as conservative against what remains an emerging, best-in-class consumer growth story,” Andress wrote in a note.

Yeti posted a solid top- and bottom-line second-quarter beat last week with 43.5% direct-to-consumer growth and Drinkware up 16%.

“While List 4 10% tariffs will go in place Sept. 1, YETI reaffirmed its FY19 outlook given near-term mitigation efforts,” Andress said.

Andress says the company will be able to mitigate a large portion of his estimate 20 cents per share impact tariffs will have in 2020, primarily through supplier negotiations and further product cost improvement. He also says current List 3 headwinds will reverse in 2020 as the company completes its supplier transition, a dynamic “not likely appreciated in Street models”.

Aside from tariff risk, the analyst says second-quarter results provide evidence that Yeti is building brand momentum, with GoBox and Daytrip bag products surpassing expectations.

Price Action

Yeti shares are down 4% Monday afternoon, trading at $29.12.

Related Links:

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