Cowen Says Yeti's Guidance Is Conservative, Predicts A Path Higher

Yeti Holdings Inc YETI has been one of the hottest stocks of 2019 and could continue its run.

The Analyst

Cowen analyst John Kernan initiated coverage on Yeti with an Outperform rating and a $35 price target.

The Thesis

Kernan says Yeti’s consensus sales and EPS estimates appear conservative as the shift to direct-to-consumer accelerates. He added that implied estimates around wholesale and international segments suggest additional conservatism.

Yeti has grown from $73 million in sales in 2014 to $779 million in 2018, and Kernan forecasts $880 million in 2019.

“This growth has been boosted by distribution growth and a devoted group of loyal consumers willing to pay premium price points across equipment, drinkware and ancillary categories. Brand extensions into categories that expand into hunting, fishing, surf, camping, bbq, rodeo and other outdoor/lifestyle activities create a durable growth profile,” Kernan wrote in a note.

The analyst says Yeti’s long-term guidance for a 10 percent to 15 percent CAGR seems conservative on the low end and is initiating coverage with above consensus sales and EPS estimates through 2021.

“Shifting to DTC represents a path to improved unit economics and faster EBIT dollar growth as Yeti will recognize full retail sales price, which translates to roughly 45% greater EBIT dollar growth," he wrote.

Price Action

Yeti's stock is up 6.1 percent Thursday afternoon at $32.05 per share.

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