Petco Health and Wellness (NASDAQ:WOOF) shares fell around 20% since the company reported mixed Q4 results and a soft outlook on Wednesday.
Q4 EPS and revenue came in at $0.23 and $1.58 billion (up 4% year-over-year), compared to the Street estimates of $0.24 and $1.57 billion, respectively.
For the full 2024 year, the company expects revenue to be in the range of $6.15-6.28 billion, missing the Street estimate of $6.38 billion.
According to the analysts at RBC Capital, the mix shift to consumables, exposure to variable rate debt, and uncertainty around sponsor ownership remain overhangs. Overall, the analysts remain of the view that Petco is on solid footing fundamentally but it will likely take mix shifting back to discretionary to get the stock working again. They lowered the price target on the stock to $10 from $14, while reiterating their Outperform rating.