On Monday, Piper Sandler maintained an Overweight rating on shares of Yeti Holdings Inc. (NYSE:NYSE:YETI), with a steady price target of $55.00. The firm expressed confidence in the company's position ahead of its third-quarter earnings report, anticipated this coming Thursday, November 7.
The assessment by Piper Sandler suggested that concerns regarding tariffs have led to an undervaluation of YETI's stock, presenting an appealing risk/reward scenario for investors. The firm's wholesale contacts indicated that demand for YETI products remained robust and steady in the third quarter, continuing the trend from the second quarter.
Looking ahead to the fourth quarter, Piper Sandler anticipates a favorable outlook for YETI, highlighting the launch of new product innovations mid-2024 that are expected to be popular gift choices during the holiday season. The firm also addressed the tariff worries, noting that by the end of 2025, only 30% of YETI's sales will be from products manufactured in China, which are higher-margin items.
Furthermore, the current share price of YETI, trading at 12.3 times forward twelve months (FTM) earnings per share (EPS), is seen as an all-time low valuation based on all-time low growth estimates. Piper Sandler pointed out that YETI has previously experienced significant rallies following better-than-expected results when the valuation was similarly low.
Moreover, the firm believes that consensus sales growth estimates for YETI, which suggest a 4% or less increase in U.S. sales for 2025 and 2026, may be conservative.
InvestingPro Insights
Recent InvestingPro data provides additional context to Piper Sandler's optimistic outlook on YETI Holdings Inc. The company's market capitalization stands at $3 billion, with a P/E ratio of 16.46, suggesting a relatively modest valuation compared to its growth potential. YETI's revenue growth of 10.8% over the last twelve months and a quarterly revenue growth of 15.14% in Q2 2024 align with Piper Sandler's observations of robust demand.
InvestingPro Tips highlight that YETI holds more cash than debt on its balance sheet, indicating financial stability. This strong financial position could support the company's ability to invest in new product innovations, as mentioned in Piper Sandler's report. Additionally, the stock is trading near its 52-week low, which corresponds with Piper Sandler's view that the current valuation presents an attractive entry point for investors.
For readers interested in a deeper analysis, InvestingPro offers 7 additional tips for YETI, providing a more comprehensive investment perspective.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.