On Thursday, Citi adjusted its outlook for Petco Health & Wellness Co. Inc. (NASDAQ:WOOF), reducing the share price target from $3.25 to $2.85, while keeping a Neutral rating on the stock. The firm anticipates a first-quarter earnings per share (EPS) of -$0.06, aligning with the company's guidance and slightly better than the Street's expectation of -$0.07.
The sales forecast stands at approximately $1.5 billion, consistent with Petco's own projections and slightly below the Street's $1.6 billion estimate.
For the first quarter, Citi projects Petco's adjusted EBITDA to be around $68.2 million, which is under the company's guidance of roughly $70 million and significantly below the Street's $88.2 million forecast. This downward revision reflects a cautious stance on the company's financial performance in the near term.
Looking ahead to the full fiscal year 2024, Citi estimates Petco will post an EPS of -$0.08, which is more optimistic compared to the Street's prediction of -$0.14. The firm's sales prediction for the year is set at $6.0 billion, which is lower than the Street's $6.2 billion estimate. Additionally, Citi's forecast for adjusted EBITDA stands at $329.3 million, which is also below the Street's expectation of $382.0 million.
The revision in the price target to $2.85 is based on a valuation of 6.0 times the enterprise value to the forecasted fiscal year 2025 EBITDA. This adjustment by Citi reflects a recalibration of expectations for Petco's financial metrics in the coming years.
The new price target and maintained Neutral rating indicate a tempered outlook on Petco's financial health and market performance, as the company navigates through its quarterly and annual fiscal periods.
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