On Thursday, Baird adjusted its price target for Petco Health & Wellness Co. Inc. (NASDAQ: WOOF), bringing it down to $2.50 from the previous $3.00, while maintaining a Neutral rating on the stock. The adjustment follows Petco's fourth-quarter results, which, according to the firm, surpassed modest expectations.
Petco has completed its assortment rebalancing and is seeing "positive momentum" from new brands, signaling some early successes from its "operational reset."
Despite these improvements, the firm noted that the company did not provide full-year 2024 guidance due to the ongoing CEO transition. Furthermore, Petco's first-quarter profit outlook fell short of analyst expectations, with adjusted EBITDA approximated to be around 17% below the consensus.
The interim CEO, Mike Mohan, is reportedly taking measures to address operational challenges within the organization, including in stores and the supply chain, aiming to stabilize profits and kick-start revenue growth.
Baird's decision to stay neutral is influenced by the current low visibility into Petco's profit and loss statement. The firm's revised price target of $2.50 reflects a cautious stance as the company navigates through its leadership changes and strives to improve its operational performance.
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