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On Thursday, Morgan Stanley (NYSE:MS) reiterated its Equalweight rating on Yeti Holdings Inc. (NYSE: NYSE:YETI) with a steady price target of $48.00. The firm’s analyst highlighted Yeti’s solid fourth-quarter earnings, which surpassed expectations with earnings per share (EPS) of $1.00, approximately 7% higher than the anticipated $0.93. This outperformance was attributed to sales and gross margin figures that met projections, improved management of selling, general, and administrative expenses (SG&A), and a reduction in share count.
Yeti’s guidance for 2025 includes an EPS forecast of $2.90 to $2.95, which aligns with the lower end of consensus estimates at $2.90. The projection accounts for a $0.10 negative impact from foreign exchange rates, which may not have been factored into the Street’s models. The company anticipates 6-8% revenue growth in constant currency terms (5-7% including foreign exchange effects). This outlook is based on a 7% adjusted sales growth in the fourth quarter, which benefited from favorable adjustments related to recall reserves and includes an additional 53rd week that was likely not included in Street expectations, suggesting underlying growth could be closer to mid-single digits. InvestingPro analysis shows the company has demonstrated strong financial fundamentals, with a current ratio of 2.58 indicating robust liquidity position.
The analyst also noted that the revenue guidance is not surprising but could be subject to debate due to a challenging U.S. market environment characterized by cautious consumer spending, increased promotional activities, and heightened competition. Despite these factors, Yeti’s guidance suggests operating margin expansion, expected to be driven more by SG&A leverage rather than gross margin growth.
The report does not clarify whether the guidance accounts for potential incremental tariffs, given Yeti’s exposure to China and Mexico. This detail is considered crucial for understanding how the stock will react on Thursday. In conclusion, the analyst believes that while the report is robust and investor sentiment has been subdued, the stock might experience some uplift, although the overall impact could be limited due to the concerns outlined.
In other recent news, YETI Holdings , Inc. reported its fourth quarter earnings, outperforming analyst expectations. The outdoor products company posted adjusted earnings per share of $1.00, surpassing the consensus estimate of $0.93. However, the company’s revenue of $546.5 million was slightly below the anticipated $552.31 million. Despite this, YETI’s adjusted net sales saw a year-over-year increase of 7% to $555.4 million in Q4, excluding impacts from product recall adjustments.
The company also announced a $350 million increase to its share repurchase program authorization. For the fiscal year 2025, YETI forecasts adjusted earnings per share between $2.90 and $2.95, above the $2.89 analyst consensus. These recent developments suggest a cautiously optimistic outlook for the company amid economic uncertainties.
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