2023-03-13 09:15:02 ET
Citi opened a 30-day downside catalyst watch on Petco Health & Wellness Company ( NASDAQ: WOOF ) on Monday, advising that its upcoming earnings results could disappoint.
Equity analyst Steven Zaccone explained that while the company is well-positioned in the long-term as pet product demand looks to grow, consumers are clearly cutting back in the near term.
“We are increasingly concerned the business model will be under pressure over the near-to-medium term based on continuing weakness in pet discretionary spending, a weakening macro backdrop forcing consumers to “tradedown” in their pet purchases, and the potential for share loss to the mass channel as consumers prioritize value offerings,” he told clients. “These factors will result in revenue growing below the company’s long-term target with EBITDA performance following suit. “
He reiterated a Neutral rating alongside the downside catalyst. Zaccone assigned an $11 price target to the stock. Shares of Petco ( WOOF ) dipped 2.2% prior to Monday’s opening bell.
Dig into the earnings expectations for the company ahead of its March 22 update .
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Petco placed on ‘30-day downside catalyst watch’ at Citi