Petco Health and Wellness Company ( NASDAQ: WOOF ) fell below $10 for the first time after Evercore ISI downgraded the pet supply retailer to an In Line rating after having it lined up at Outperform.
While the firm likes the growth story with WOOF, weakness of hardgoods and the company's floating-rate debt load is expected to put pressure on fundamentals in the near term.
Analyst Greg Melich and team also warn that current headwinds are not factored into the consensus estimates on Petco ( WOOF ) for 2023.
On valuation, Evercore does not see WOOF expensive at 15X the 2023 EPS estimate of $0.70 vs. $0.85 consensus, but a lack of positive catalysts in the near-term keeps the firm on the sidelines.
Shares of WOOF were down 5.77% to $10.05 at 10:15 a.m. after carving out a new all-time low of $9.93 earlier in the session.
The Seeking Alpha Quant Rating on WOOF flipped to Sell on September 16 before the 40% share price collapse.
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Petco slides to new all-time low after Evercore downgrade