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Investing.com - BofA Securities initiated coverage on Pets at Home Group Plc. (LON:PETS) (OTC:PAHGF) with an Underperform rating and a price target of GBP1.83 on Friday.
The research firm cited concerns about the company’s earnings growth trajectory, noting that while Pets at Home achieved a 13% compound annual growth rate (CAGR) in earnings per share from 2019 to 2023, its outlook has deteriorated significantly.
BofA Securities highlighted that the company’s 2026 estimated earnings per share has fallen 35% over the past 12 months, and the firm forecasts a much slower 2% CAGR for EPS from 2026 to 2030.
The analysis points to declining gross margins during the pet boom years, with only 38% of the decline attributable to product mix changes, suggesting structural challenges for the business.
While acknowledging that Pets at Home’s veterinary business has performed exceptionally well, BofA Securities warned of emerging downside risks and projected a potential total shareholder return of -8%.
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