Yeti: The Next Private Equity Target? A Deep Dive into Jefferies' Skechers Comparison

Jefferies has sparked investor curiosity by comparing YETI Holdings (NYSE: YETI) to Skechers (NYSE: SKX), a brand recently acquired by 3G Capital in a $9.42 billion deal. Analyst Randal Konik argues that YETI “mirrors the appeal” that drew 3G to Skechers, citing shared strengths in innovation, global expansion, and cash flow resilience. Let’s unpack the parallels and assess whether YETI could be the next target for private equity.

Financial Fortitude: YETI’s Cash Flow Machine

Jefferies highlights YETI’s 9% free cash flow yield, a metric that places it in a league of its own among consumer discretionary stocks. Skechers, too, had strong cash flow dynamics, with $2.41 billion in Q1 2025 revenue—7.1% higher year-over-year—that fueled its appeal to 3G. YETI’s balance sheet further bolsters its case: a current ratio of 2.18 (far exceeding the 1.0–2.0 healthy range) and an Altman Z-Score of 6.5 (indicating minimal bankruptcy risk) signal financial stability.

Innovation and Global Reach: The Growth Engine

Both companies excel in product innovation. Skechers’ footwear and apparel line, distributed across 5,300 global retail outlets, drove its valuation. YETI, meanwhile, is expanding its premium outdoor portfolio into adjacent markets like hydration systems (e.g., its Gold Coast Collection) and international territories. Its 10.3% year-over-year revenue growth and 58.1% gross profit margin reflect operational discipline.

Jefferies notes that YETI’s partnerships with outdoor brands and its direct-to-consumer model mirror Skechers’ strategies. For instance, YETI’s current international revenue mix of 25% (targeting 35% by 2026) parallels Skechers’ global footprint.

Private Equity Playbook: Why YETI Fits the 3G Mold

3G Capital’s acquisitions typically target cash-generative businesses with scalable growth. Skechers’ deal—priced at a 30% premium to its 15-day VWAP—demonstrates how 3G rewards companies with strong brands and efficient operations. YETI’s $28.96 share price (as of May 2025) versus Jefferies’ $55 price target suggests significant undervaluation.

Jefferies argues that YETI’s engagement with activist investor Engaged Capital—which pushed for board expansion and strategic reviews—aligns with 3G’s hands-on approach. The firm’s focus on shareholder value maximization, coupled with YETI’s defensive positioning against tariffs (via pricing and sourcing adjustments), adds to its appeal.

The Bulls vs. the Bears: Analysts Weigh In

While Jefferies is bullish, not all analysts share the enthusiasm. Canaccord Genuity maintains a Hold rating with a $42 price target, citing valuation concerns, while Citi’s $47 target reflects cautious optimism. The consensus average of $37.75 implies a 34.9% upside from current levels, but Jefferies’ $55 target represents a 90% premium, arguing that YETI’s asymmetric upside justifies the optimism.

Conclusion: YETI’s Case for a Takeover

The parallels between YETI and Skechers are compelling. Both boast robust brands, strong cash flow, and growth catalysts in innovation and global expansion. With Jefferies’ Buy rating and a $55 price target—supported by metrics like its Altman Z-Score of 6.5 and 9% free cash flow yield—the case for YETI as a private equity target is strong.

Should YETI attract a buyer, the precedent set by Skechers’ 30% premium could push shares toward the $55 level or higher. Even without a deal, YETI’s fundamentals suggest a compelling investment: its 10.3% revenue growth, 58.1% gross margin, and limited downside risk (Altman Z-Score >6.5) make it a standout in a volatile market.

Investors should monitor YETI’s progress in international markets and new product launches, while keeping an eye on activist campaigns. Whether through a takeover or organic growth, YETI’s blend of resilience and ambition positions it as a top-tier consumer discretionary play.

In sum, Jefferies’ comparison isn’t just theoretical—it’s a roadmap for YETI’s potential. With its Skechers-like qualities, this outdoor brand could be primed for its own “next chapter” in 2025 and beyond.