Petco Health Announces Secondary Offering of 22M Shares


Petco Health and Wellness Company, Inc. (WOOF) announced that its principal stockholder, Scooby Aggregator, LP plans to sell 22 million shares of its common stock via an underwritten secondary offering. Shares of the pet health and wellness company have declined 16.4% since its IPO in January this year.

In addition, the underwriters will be granted a 30-day option to purchase up to an additional 3.3 million shares. All the proceeds will go to the seller, Scooby Aggregator.

The Company stated that it is not selling any shares in its personal capacity and will not receive any proceeds from the seller or the underwriters if they exercise their option. (See Petco Health stock analysis on TipRanks)

On May 20, Petco posted upbeat Q1 results. EPS of $0.17 topped the consensus estimate of $0.09. Revenues of $1.4 billion beat analysts’ estimates of $1.27 billion driven by robust comparative sales growth of 28%.

The company also raised its full-year guidance and now expects FY2021 revenues in the range of $5.475 billion – $5.575 billion versus $5.25 billion – $5.35 billion forecast earlier. It expects adjusted EPS to range between $0.73 and $0.76 versus $0.63 -$0.66 guided earlier.

On May 20, Robert W. Baird analyst Peter Benedict reiterated a Buy rating and a price target of $30 (25.7% upside potential) on the stock.

Following the strong Q1 results, Benedict raised his estimates for the company. He commented that the robust demand seen across all the key segments and merchandise categories and rapid new customer additions bodes well for the stock and should be considered as a buying opportunity.

Overall, the stock has a Strong Buy consensus rating based on 4 Buys and 1 Hold. The average analyst price target of $29 implies 21.5% upside potential to current levels.

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