On Friday, Canaccord Genuity maintained a Hold rating on Yeti Holdings Inc. (NYSE:YETI) with a consistent price target of $44.00. The company's strategy of introducing new limited-edition colors for its drinkware products was highlighted, with the recent addition of Lowcountry Peach. This release marks the 12th new color for 2024, surpassing the previous record of eight in 2021.
Yeti reintroduced Sandstone Pink as a limited-edition color three weeks ago, which had been previously offered in 2021. The strategy of rolling out several limited-edition colors throughout the year is aimed at driving demand for existing products. Olive has now become a core color in the lineup, indicating a shift in the company's approach to its color offerings.
In comparison, competitor Stanley has launched 22 new colors, collections, or partnerships year-to-date (YTD). This raises questions about the current demand and competitive landscape in the market, particularly as the year progresses. Yeti's record sales increase of 29% in 2021, attributed to a stimulus-fueled boom, suggests that color variations may not have been as crucial for driving demand during that period.
Canaccord's analysis indicates that Yeti's organic Master Stock Keeping Units (SKUs) have grown by 14% YTD. This figure includes the addition of color options and products from recent acquisitions of Mystery Ranch and Butter Pat Industries, such as bags, cast iron skillets, and cookware. The analyst noted that the SKU count has nearly doubled YTD when these factors are considered.
The firm's commentary suggests that Yeti's extensive focus on color variation this year may be an effort to stimulate demand. Without additional information, Canaccord interprets this strategy as potentially negative, as it could indicate that the brand is relying heavily on aesthetic updates to drive sales. The Hold rating and $44 price target reflect the firm's current stance on Yeti's stock.
In other recent news, YETI Holdings Inc. reported a robust second quarter for fiscal 2024, with sales growing by 9% to reach $464 million. The growth was primarily driven by a 14% increase in the coolers and equipment category and international market expansions. The company's gross profit rose by 14% to $268 million, and operating income increased by 19% to $80 million. YETI also revised its full-year sales forecast upwards, now expecting an 8%-10% increase.
Meanwhile, Canaccord Genuity maintained its Hold rating on Yeti Holdings Inc. stock, citing concerns over increasing competition in Yeti's core markets and a weakening consumer spending environment. Despite acknowledging Yeti's better-than-expected performance year-to-date and recent product innovations, the firm remains cautious.
InvestingPro Insights
Yeti Holdings Inc. (NYSE:YETI) has demonstrated financial resilience, holding more cash than debt on its balance sheet, which could provide a buffer against market volatility. In addition, the company's liquid assets exceed its short-term obligations, indicating a strong liquidity position that may support Yeti's ongoing product innovation and color variation strategies. With a market capitalization of $3.38 billion and a P/E ratio of 18.15, Yeti's valuation reflects its current earnings capacity. The company's revenue has grown by 10.8% over the last twelve months as of Q2 2024, showcasing its ability to expand sales amidst a competitive landscape.
InvestingPro Tips highlight Yeti's recent stock price volatility, which could be relevant for investors considering the timing of their investments. Yet, analysts predict the company will be profitable this year, having been profitable over the last twelve months. This profitability, coupled with a strong gross profit margin of 58.33%, may offer some reassurance despite the price volatility. It's worth noting that Yeti does not pay a dividend, which could influence the investment decisions of income-focused shareholders.
For those seeking more comprehensive analysis, there are additional InvestingPro Tips available on Yeti, which can be found at https://www.investing.com/pro/YETI. These tips provide deeper insights into Yeti's financial health and market position, further enriching the investment decision-making process.
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