Lisa Cook sues Trump over firing attempt, emergency hearing set
Investing.com - Citi has reiterated its Neutral rating and $4.00 price target on Petco Health & Wellness Co. Inc. (NASDAQ:WOOF) as the investment bank closes its positive short-term view on the pet retailer.
The decision comes after Petco stock experienced a strong rally over the past few weeks, which Citi attributes to a broad-based short unwind in the retail sector. According to InvestingPro analysis, the stock is currently trading above its Fair Value, with technical indicators suggesting overbought conditions.
Citi believes it is "prudent to close the trading call given the outperformance" and now sees "a more balanced risk/reward at current levels" for the pet specialty retailer.
The investment bank acknowledges that Petco is currently "in the midst of a self-help turnaround" as it works to improve its business performance.
Despite these improvement efforts, Citi notes that "the demand environment has been choppy in pet retail," suggesting continued challenges in the broader market segment.
In other recent news, Petco Health and Wellness Company Inc. reported first-quarter 2025 earnings that fell short of forecasts. The company posted an earnings per share (EPS) of -$0.04, missing the anticipated -$0.02, and revenue came in at $1.5 billion, below the expected $1.55 billion. Despite these results, BofA Securities analysts raised Petco’s stock price target to $2.50 from $2.10, citing improved EBITDA performance. Petco’s adjusted EBITDA for the first quarter was $89.4 million, surpassing both BofA’s expectation of $83 million and the Street’s estimate of $82 million. However, net sales declined by 2.3% year-over-year, with comparable store sales down 1.3%, primarily due to the closure of 30 stores over the past year.
Meanwhile, Woof Intermediate Inc., operating as Wellness Pet, underwent a debt restructuring, leading to a credit rating upgrade by S&P Global to ’CCC+’ from ’SD’. This restructuring included lenders exchanging first-lien and second-lien term loans for new first-lien term loans at a discount, along with an infusion of $100 million in new money. Despite the upgrade, S&P previously downgraded Wellness Pet’s credit rating following the debt restructuring, viewing the move as distressed. The restructuring also extended the maturity of the company’s asset-based lending facility to October 2029, with an outstanding balance of $30 million as of March 2025.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.