Petco Health and Wellness Company Inc WOOF:NASDAQ

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Petco Likely to Deliver Positive Q1 Earnings, Wedbush Says

1:00PM ET 5/12/2022 MT Newswires
Petco Health & Wellness (WOOF) Q1 earnings should bring "more upside than downside risk" to results and guidance versus buy-side expectations, Wedbush Securities said in a note on Thursday.

The analysts said they are positive on the company due to expectations that "accelerating inflation and traction on loyalty and services initiatives" will offset "a continued modest slowdown in discretionary demand due to the fading new pet boom and macro headwinds."

The pet-supply retailer is expected to release its quarterly results on May 24.

Wedbush said the macroeconomic pressures should hit about 55% of Petco's business related to supplies and services. However, rising consumables sales due to growing pet food consumption, inflation, loyalty, services and online channel initiatives should enable it to continue to take share in a market set to grow more than middle single digits this year, the note added.

The investment bank also expects Petco to keep or only slightly cut its 2022 guidance due to the inflationary pressures.

Wedbush has an outperform rating on Petco and $25 price target.

Price: 18.60, Change: +0.70, Percent Change: +3.91