On Tuesday, Canaccord Genuity began coverage on Central Garden & Pet Co. (NASDAQ: CENT), assigning the stock a Buy rating and setting a price target of $52.00. The firm highlighted the company's strong presence in the lawn, garden, and pet supplies industries, noting its significant growth since its founding in 1980.
Central Garden & Pet, recognized as the number two player in the pet food and supplies sector (excluding dog and cat food and cat litter), has established a portfolio of leading brands. The company has chosen specific market segments to avoid direct competition with large multinationals.
Canaccord Genuity pointed out CENT's strategic market positions, including a number one share with its Kaytee brand in pet bird and small animal categories, and a second-place standing in dog toys through its Nylabone brand.
The company also boasts leadership in the wild bird space with its Pennington brand, which also holds the second rank in grass seed. Additionally, Central Garden & Pet has a robust position in fertilizers, supported by the Pennington brand and select private label partnerships, as well as in controls with its Amdro and Sevin brands.
Canaccord Genuity expects Central Garden & Pet to experience more predictable growth and margin expansion, which they believe has been well-managed during recent periods of persistent inflation. The firm anticipates that the company will continue to increase its market share organically and through mergers and acquisitions, despite the various challenges posed by the pandemic, its aftereffects, and fluctuating pet ownership dynamics.
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