William Blair initiated research coverage of Traeger, Inc. (COOK $25.78), the creator and category leader in wood pellet grills. Traeger also offers complementary accessories and consumables.
Analyst Sharon Zackfia estimates the company could generate 20%-plus top-line growth and 30%-plus EPS growth through 2024. She forecasts revenue of $754.3 million and EPS of $0.26 for 2021, and revenue of $945.9 million and EPS of $0.56 for 2022.
“Traeger’s brand is centered on its connected wood-fired grills,” Zackfia said, “with patented technology that creates a semiautomated cooking process yielding impressive consistency and ease of use—effectively making its customers backyard pitmasters. Traeger’s consumer appeal is illustrated by the more-than-fourfold increase in sales the company experienced between 2015 and 2020 and the evangelical brand affinity of its customers—known as the ‘Traegerhood.’ Still, despite a domestic installed grill base of roughly 2 million, Traeger’s unaided brand awareness remains low at 11%, providing a highly visible pathway to gain further share as brand awareness rises through increased top-of-funnel marketing. In addition, we believe Traeger can rapidly grow its domestic sales without the need for new retail doors, as its existing retail partners already have significant presence in areas of low brand awareness east of the Mississippi. Further, Traeger is beginning to invest more heavily in adjacent consumables categories such as sauces and rubs, and recently entered the grocery channel. While increasing brand awareness and executing on its domestic sales opportunity will represent the bulk of growth through 2024, we also believe Traeger has a sizable opportunity outside the United States, with international only 3% of sales in 2020.”
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Current Ratings Distribution (as of 8/22/21)
Outperform (Buy): 76%
Market Perform (Hold): 24%
Underperform (Sell): 1%
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Outperform (Buy): 31%
Market Perform (Hold): 13%
Underperform (Sell): 0%
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