Wedbush Reiterates Neutral On PetSmart As Potential Upside Largely Priced Into Shares


In a research note published yesterday, Wedbush analyst Seth Basham reiterated a Neutral rating on PetSmart (PETM) with a $64 price target, which suggests a potential downside of 9% from where the stock is currently trading.

Basham wrote, “A couple of weeks ago we assumed coverage on PetSmart and rated an acquisition of Petco a 20% probability in the next year,based on our initial analysis. In light of recent activist involvement in the name, we redoubled our analysis and delved much deeper into the key issues involved in such a major transaction, which we explore in this report. Our conclusion remains largely the same: we see this as the best potentialstrategic action for the company, potentially adding at least 30% EPS accretion and at most, that amount to shares from current levels given more limited EBITDA accretion. On a probability-weighted basis, we see this potential upside or a leveraged buyback largely priced into shares, keeping us neutral on PETM”.

According to TipRanks.com, which measures analysts and bloggers success rate based on how their calls perform, analyst Seth Basham currently has a one-year average return of 12.3% and a 90% success rate. Basham is ranked #1126 out of 3211 analysts.

 

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