Wells Fargo maintains Equal-Weight for Petco Health, raises PT to $4 from $3.5.

Wells Fargo maintains Equal-Weight for Petco Health, raises PT to $4 from $3.5.

Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) reported strong second-quarter earnings, with shares surging more than 16% in premarket trading on Friday. The pet retailer's adjusted earnings per share (EPS) of $0.05 exceeded analyst expectations of $0.01, driven by improved profitability metrics despite a sales decline [3].

Petco's gross profit margin expanded by roughly 120 basis points to 39.3% of net sales, while operating income rose $40.6 million to $43.0 million. Adjusted EBITDA increased $30.3 million to $113.9 million, well above guidance of $92-$94 million. The company raised its fiscal year 2025 adjusted EBITDA guidance to a range of $385 million to $395 million, up from the previous $375 million to $390 million [3].

Wells Fargo & Company (NYSE: WFC) maintained an equal-weight rating for Petco Health and Wellness but raised its price target to $4 from $3.50, reflecting the company's improved earnings performance and the analyst's expectation of further growth potential [1]. The analyst noted that Petco's near-term revenue outlook is challenging due to tougher Q3 comparisons, but raised the price target to $4.00, roughly 6x the fiscal year 2026 adjusted EBITDA estimate.

Petco's strategic focus on pet humanization and e-commerce positions it to capitalize on the growing $157 billion U.S. pet care market projected by 2025. The company operates more than 1,500 pet care centers across the United States, Mexico, and Puerto Rico, offering a full spectrum of pet health and wellness products and services [1].

For the third quarter, Petco anticipates adjusted EBITDA between $92 million and $94 million, above the consensus estimate of $86.9 million. The company confirmed its capital expenditure plan of $125 million to $130 million for the year [3].

References:
[1] https://www.marketscreener.com/news/petco-health-and-wellness-q2-25-earnings-presentation-vfinal-1-ce7c50dcdb8ef624
[2] https://www.ainvest.com/news/petco-health-shares-soar-18-89-strong-earnings-2508/
[3] https://investorshub.advfn.com/market-news/article/15475/petco-shares-jump-16-after-strong-q2-earnings-and-higher-full-year-forecast