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Trade of the Week: Yeti (YETI) Calls

by | May 23, 2021

Yeti (YETI) shares holding up well recently and flagging above the rising 50-MA and prior range with plenty of room for upside on a breakout. The May value-area high is just above at $88.25 and a breakout has a measured move to $100. Shares closed above the 8-, 13-, and 21-day MA on Friday and both MACD and RSI have reset and ready to run. YETI has seen a lot of bullish put sales lately across August and January while the August $90 calls have been bought over 3,500X since 5/6, sizable positioning over $2.4M. The $7.32B company trades 31.8X earnings, 6.27X sales, and 38.5X cash. YETI is coming off of a strong quarter with gross margins expanding 700 bps and turning more investments toward International growth and channel expansion. The company is also focused on data analytics and other digital capabilities which will improve overall targeting and inventory rationalization. Analysts have an average target for shares of $86.75 and a Street High $115. BAML raising estimates on 5/14 citing their outlook on Yeti’s continued domestic momentum and significant long-term international opportunity. CSFB positive as well with a $105 PT noting that the brand remains underpenetrated in large parts of the country, its international business is nascent, and there is opportunity to enter new product categories, thus expanding its addressable market. Short interest is 7.4%. Hedge fund ownership rose 7.75% in Q1. Leonard Green a buyer of call options and Wilkinson Global buyer of 500,000 shares.

Trade to Consider: Long the YETI August $90 Calls for $7 or Better

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