Buy Rating Reaffirmed: Temporary Margin Headwinds Mask Long-Term Growth and Upside in Pet Care Business

Analyst Adela Dashian from Jefferies maintained a Buy rating on Swedencare AB and keeping the price target at SEK55.00.

Adela Dashian has given his Buy rating due to a combination of factors that, in her view, outweigh the temporary setback reflected in the profit warning. While fourth-quarter profitability was dragged down by unusually high marketing and sales expenses tied to Amazon and big-box retail rollouts, she sees these as largely non-recurring or transitional in nature. The company still delivered solid organic revenue growth, and the earnings shortfall is mainly attributed to specific items such as intensified Amazon marketing during the NaturVet migration, ERP-related disruptions, heavy upfront investments in Walmart displays, rebranding costs, and inventory write-downs. Despite management’s disappointment with the quarter, Dashian notes that several key brands performed well and that the long-term strategy remains intact.

Dashian’s positive stance is further supported by management’s guidance for margin improvement in 2026 once the Amazon transition is completed and big-box channel profitability normalizes. She also highlights the potential upside from expanding veterinary partnerships and a pipeline of new product launches, which should bolster both growth and margins. Early data from 2026, including encouraging sell-through trends at Walmart, is viewed as validation that recent investments are beginning to pay off. With a target price of SEK 55.00 implying substantial upside from current levels, she concludes that the present weakness offers an attractive entry point into a structurally growing pet care business undergoing a temporary margin dip.