Many companies are facing supply chain challenges following pandemic-related shutdowns, but analysts say grill maker Weber Inc.’s manufacturing system will help that newly public company avoid many of those problems.
From Nike Inc. /zigman2/quotes/203439053/composite NKE -1.12% to Buckle Inc. /zigman2/quotes/207388380/composite BKE +0.50% to Yeti Inc. /zigman2/quotes/206430919/composite YETI -1.35% , companies have discussed the supply chain issues they face due to a shortage of drivers and containers, facility shutdowns overseas and other issues.
Weber’s /zigman2/quotes/203784864/composite WEBR -0.12% setup allows it to avoid many of those hurdles.
“Weber is uniquely positioned as the only major grill company with significant U.S.-based manufacturing as part of its ‘Make Where We Sell’ initiative,” wrote BMO Capital Markets analysts in a note. “Benefits from Weber’s supply chain/manufacturing initiatives can be seen through improved inventory metrics, with further future improvement expected ahead.”
BMO, which described Weber’s supply chain operation as “strong and sophisticated,” initiated coverage of the stock with a market perform rating and a $19 price target, or about 14% above its current price.
BMO analysts noted Weber’s dominant position in the grill category, with a share equal to about a quarter of the market.
BofA Securities highlighted Weber’s diverse portfolio.
“Weber is a leading outdoor cooking brand with a diversified revenue mix across gas grills (58% of 2020 revenues), charcoal grills (12%), pellet, electric, other (4%), and accessories and fuel (26%),” analysts said.
BofA initiated coverage with a buy rating and $20 price objective.
Weber is also getting a boost from grilling and outdoor lifestyle trends that developed during the pandemic, according to KeyBanc Capital Markets.
“FY20 sales increased +17.7%, with FY21 projected +28.6%, but looking ahead, and as delta forces consumers to again rethink a return to normal, our survey work points to elevated desires for cook from home and time spent in backyards, shifts we think prove more enduring versus transitory,” analyst led by Brett Andress wrote.
The company offers long-term value thanks to its strong brand, consistent record and growth potential, they wrote.
KeyBanc rates Weber at sector weight.
Even with some tough comparisons ahead, JPMorgan analysts are bullish, and initiated Weber shares at overweight with a price target of $19.50.
“While the COVID lap presents difficult comparisons, we believe the robust new product pipeline (e.g., innovative Weber Connect technology, gas grill line re-launch), accelerating growth in direct-to-consumer and accessories, and secular factors (e.g., millennial household formation, semi-permanence of some COVID lifestyle changes like outdoor cooking/entertaining, multi-grill ownership) support continued sales growth (in addition to a record consumer environment in the U.S., ~50% of sales),” analysts said.