Goldman Sachs cut its rating on YETI Holdings ( NYSE: YETI ) to Neutral from Buy on Friday, voicing less confidence in the company’s ability to fulfill its formerly bullish expectations.
“Our initial thesis was based on YETI's status as a growth compounder with best-in-class brand positioning, fueling US market share capture, category expansion, and international momentum at strong margins,” the downgrade explained. “While we continue to see several of these drivers as long-term opportunities, we now have less conviction in the outlook for revenue outperformance as growth in core product categories (drinkware) and channels (wholesale) has faded.”
The team added that continued spending by Yeti has added pressure to margins that are already squeezed by inflation and supply chain impacts. Efforts to balance inventory levels and the amount of pricing power the company retains also remain open questions, according to the bank's analysts.
Goldman cut its price target to $43 from $51 alongside the step to the sidelines. Shares of the Texas-based consumer products company fell 2.21% in premarket action, extending a modest drop marked on Thursday after an inauspicious earnings result .
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Yeti Holdings downgraded as Goldman questions revenue runway