Jefferies analyst Kaumil Gajrawala maintained a Hold rating on Petco Health and Wellness Company (WOOF – Research Report) today and set a price target of $4.05.
Kaumil Gajrawala has given his Hold rating due to a combination of factors including Petco’s ongoing transition with a new management team focused on improving the company’s fundamentals. The company is undergoing significant changes, with a critical emphasis on execution to stabilize and enhance its operations. Despite some progress in margin improvement and cash flow, the company faces challenges in managing these changes effectively.
Sales have declined, and the company plans to close additional stores, which adds uncertainty to its future store footprint. While there is a positive outlook for adjusted EBITDA growth, the guidance does not rely on favorable macroeconomic conditions or market share gains. The phased approach to operational improvements suggests that it may take time for tangible results to manifest, leading to a neutral outlook in the near term. Overall, the focus remains on cost management and productivity, with growth expected to follow once there is more flexibility for reinvestment.
Gajrawala covers the Consumer Defensive sector, focusing on stocks such as PepsiCo, Coca-Cola, and Monster Beverage. According to TipRanks, Gajrawala has an average return of 1.5% and a 54.03% success rate on recommended stocks.
In another report released today, Evercore ISI also maintained a Hold rating on the stock with a $4.00 price target.