Morgan Stanley Downgrades Yeti, Says Good News Is Priced In For Now

Yeti Holdings Inc (NYSE: YETI) is off to a remarkable start in 2019 with shares up 115 percent year to date, but good news may now be priced.

The Analyst

Morgan Stanley analyst Kimberly Greenberger on Friday downgraded Yeti from Overweight to Equal-Weight and raised her price target from $26 to $32.

The Thesis

Greenberger remains constructive on Yeti’s long-term outlook but now sees a more balanced rick-reward scenario. The analyst says she looks to re-upgrade the stock on a pullback.

“The stock has significantly outperformed YTD, driven by significant multiple expansion and slightly better than expected financial performance and now sits 77% above where it IPO’d last October,” Greenberger wrote in a note.

At $32, the stock appears to be pricing in five-plus years of mid-teens revenue growth, and while the analyst sees this as a feasible outcome, the market is already pricing in a majority of Yeti’s potential EBIT margin upside.

Greenberger says two areas where she could be wrong lie in customization and lower tariffs.

Later on in the year, the company is set to combine its main website with YETIcustomshiop.com, to create a stronger customer experience with customize products.

Price Action

Yeti’s stock was down 5.14 percent Friday, closing at $30.25 per share.

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Photo by Tony Webster/Wikimedia.