JPMorgan started off coverage on Rover Group Inc. ( NASDAQ: ROVR ) with a Neutral rating.
The firm sees the pet services category as attractive given low online penetration, high fragmentation, and secular tailwinds including increased pet ownership and pet humanization/premiumization. Rover is also seen as the clear category leader with 10X more scale than its closest competitor, however, the risk/reward profile on ROVR is seen as balanced at the current trading level. The potential macro impact on leisure travel in late 2022-2023 is called a concern with Rover bookings correlated strongly to leisure travel trends. The limited visibility into the timing and magnitude of workers fully returning to office is also seen limiting the upside in the near term.
JPMorgan's price target of $5 on ROVR is based on 13X the 2024 adjusted EBITDA estimate.
Rover Group ( ROVR ) has traded in a post-SPAC range of $3.62 to $15.59.
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Rover Group seen at risk if leisure travel falls off