Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Institutions Buy The Dip In Petco Health And Wellness Company

By MarketBeat.com (Thomas Hughes )Stock MarketsMay 25, 2022 01:10AM ET
www.investing.com/analysis/institutions-buy-the-dip-in-petco-health-and-wellness-company-200624820
Institutions Buy The Dip In Petco Health And Wellness Company
By MarketBeat.com (Thomas Hughes )   |  May 25, 2022 01:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Institutions See Value In Petco

The price action in Petco (NASDAQ:WOOF) has been ratcheting lower ever since the IPO two years ago. The takeaway, however, is that institutional activity has been net bullish the entire time and the activity is picking up once again.

The price action in the stock hit a new low recently, under the influence of strong short-selling, and the institutions stepped in to buy on the dip. At least four major purchases have been reported so far including Neuberger Berman which owns nearly 1.6% of the company.

This has the total institutional ownership up to 62.5% and growing we think, now that Q1 results are in the bag.

The insider activity has been pretty telling as well. There haven’t been any insider transactions for the last two quarters and the net of activity for the trailing twelve months is bearish but the details are revealing.

The selling was done in Q2 by a single larger shareholder who cashed out on the investment while since then there has only been buying. There have been two insider transactions, one from the CFO and one from the CEO, for a total of $1.1 million in purchases.

The amount isn’t much but it is a factor in favor of higher share prices, as is the 24% short interest. Sooner or later the shorts are going to have to cover and it may be hard for them to find shares to buy.

Petco Health And Wellness Company Has Healthy Quarter

Petco had a good quarter in light of the underperformance posted by Petmed Express (NASDAQ:PETS). The company reported $1.48 billion in revenue for a gain of 4.3% over last year and it beat the Insidertrades.com consensus figure by $0.03 billion or 2.0%.

The revenue was driven by a 5.1% comp, up 33.5% versus 2 years ago, and is accompanied by robust GAAP margin expansion. The GAAP EPS came in at $0.09 or up $0.06 from last year while the adjusted earnings were only flat albeit $0.02 better than expected.

The key takeaway, however, is guidance. The company is only reiterating its guidance for revenue and earnings but in a range that brackets the consensus.

This is important in a world plagued by rising inflation and its impacts on both top and bottom-line results. In our view, Petco Health & Wellness combines the best of brick & mortar and eCommerce and will most likely outperform its own guidance.

The Analysts Are Holding On To Petco Health And Wellness Company

The analysts have been silent about the Q1 results so far but we don’t think there is much to worry about from that direction. The Insidertrades.com consensus rating and price target are down versus last year, but firm since the last earnings release and there is no reason to expect change now.

The consensus price target of the 12 current ratings is $24 or about 60% above the current price action. The target may come down a bit in the near term but, trading at only 16X its earrings with a firm if not favorable outlook, we don’t think it will come down much.

The Technical Outlook: Petco Health And Wellness Is At An Extreme Low

The price action in Petco moved higher in premarket trading, but has since fallen back to the prerelease lows. While price action may come under pressure in the near term, we think it is near or nearing a bottom that could result in short-covering at the very least.

Assuming price action is able to maintain support above the $14.00 level, we see this stock moving sideways for the next quarter or two and possibly retesting resistance at $17.80. If, however, a new low is set and the institutions lose interest, we think this stock could move down another 10% to 20%.

WOOF Chart
WOOF Chart

Original Post

Institutions Buy The Dip In Petco Health And Wellness Company
 

Related Articles

Institutions Buy The Dip In Petco Health And Wellness Company

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email