Tariff concerns for Yeti Holdings Inc (NASDAQ: YETI) are overblown, according to Baird.

With around 55 percent of Yeti’s sales exposed to “List-4” tariffs, the company screens unfavorably if trade tensions with China escalate further — but the analyst said further research shows that profit and loss impacts would likely prove manageable.

Baird: Tariffs 'Manageable' For Yeti

Analyst Peter Benedict said in a Sunday note that Baird estimates a 25-percent tariff on drinkware would increase Yeti’s annual product costs by roughly $40 million, but the company has been working on List-4 tariff mitigation strategies since last fall.

“In short, while a 25% List-4 tariff would represent a $40M ‘do nothing’ scenario cost headwind, this outcome seems highly unlikely given prospects for a Mexico-type approach and the multiple levers available to re-base costs/adjust pricing if necessary,” the analyst said.

If List-4 tariffs do become a reality, a low-to-mid single digit price increase would be sufficient to offset the potential impact on EBITDA, Benedict said.

“Given the brand's momentum and only recent focus on product cost optimization, navigating through a List-4 tariff environment should prove manageable."

Baird maintained an Outperform rating on Yeti with a $38 price target.

KeyBanc Says Retailer 'Uniquely Positioned'

After attending the opening of Yeti’s new retail location in Charleston, South Carolina, KeyBanc Capital Markets analyst Brett Andress said in a Sunday note that the new store impressively blends the best practices from its Austin flagship store into a smaller format.

The store opening marks the next immediate step in Yeti’s omni-channel evolution, taking cues from other best-in-class experiential retailers like Lululemon athletica inc. (NASDAQ: LULU), the analyst said.

“Management continues to target 4-6 store openings over the MT, focusing on quality over quantity, and alluded to the potential for 3K square foot and pop-up formats as the concept and its target markets evolve.”

Yeti is set for more stores opening in Chicago in the third quarter and Denver in the fourth quarter, according to KeyBanc.

All-in, Andress said he continues to strongly favor Yeti's growth story “and views this innovative, premium brand as uniquely positioned with its high-growth, high-margin DTC business and relationships with national accounts."

KeyBanc maintained an Overweight rating on Yeti with a $36 price target.

Yeti shares were down 0.87% at $26.77 at the close Monday.

Related Links:

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

A Look At Yeti's Competitors

Photo by Tony Webster via Wikimedia.

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