Petco Health and Wellness Faces Challenges Amid Declining Sales and Market Share Risks

Analyst Kendall Toscano of Bank of America Securities reiterated a Sell rating on Petco Health and Wellness Company (WOOF – Research Report), with a price target of $2.50.

Kendall Toscano has given his Sell rating due to a combination of factors impacting Petco Health and Wellness Company. Despite reporting an adjusted EBITDA that surpassed expectations, Petco’s net sales have declined by 2.3% year-over-year, with comparable sales dropping by 1.3%. This decline is further exacerbated by the closure of 30 stores over the past year, including five in the first quarter.
While there has been some progress in margin management and cost control, Toscano remains concerned about the ongoing softness in same-store sales and the potential for market share erosion. The shift of consumers towards online and broadline competitors poses a significant risk to Petco’s market position. Additionally, despite raising the price objective slightly, Toscano maintains an Underperform rating due to these persistent challenges and the uncertain outlook for meaningful margin recovery in the near term.

WOOF’s price has also changed moderately for the past six months – from $4.900 to $3.620, which is a -26.12% drop .