Yeti Holdings Inc (NYSE: YETI), a maker of premium coolers and related accessories, struck a partnership with Lowe's Companies, Inc. (NYSE: LOW) that could generate 10% EPS upside, according to KeyBanc Capital Markets.
The Yeti Analyst
Brett Andress maintains an Overweight rating on Yeti's stock with a $38 price target.
The Yeti Thesis
Andress conducted firsthand checks at eight Lowe's stores across Florida that now carry YETI PRODUCTS, the analyst said in a Tuesday note.
The checks were positive and encouraging given a broad offering of available products in high-traffic areas, he said. The branded end-caps in the front of the store were also located close to checkout aisles and in the seasonal section, Andress said.
An analysis of on-shelf inventory at the stores and basic selling assumptions equate to $36,000 worth of Yeti products sold at each store, the analyst said.
If Yeti products are rolled out from 1,150 Lowe's stores today to its more than 1,700 stores, it would represent a potential $30 million of incremental annual sales in 2021, or an extra 10 cents of incremental EPS in 2021, Andress said.
An analysis of KeyBanc's proprietary credit and debit card data for Yeti.com points to a "robust" 62% increase in sales in the fourth quarter, the analyst said.
This implies a mid-teens growth rate for October and November before a notable acceleration of more than 100% in December, according to KeyBanc.
Yeti Price Action
The stock was trading 2.96% higher at $32.32 at the time of publication.
Photo courtesy of Yeti.