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TheStreet Open House

Will This Price Target Increase Help PetSmart (PETM) Today?

Story updated at 9:35 a.m. to reflect market activity.

NEW YORK (TheStreet) -- Jefferies raises its price target for PetSmart (PETM) to $68 with a "hold" rating Thursday.

PetSmart gained 0.1% to $66.73 in morning trading.

The firm says that a big pickup in traffic is expected following consumables reset and other initiatives. The raise price target comes a day after PetSmart posted fourth quarter results with earnings that beat analysts' expectations.

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Separately, TheStreet Ratings team rates PETSMART INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate PETSMART INC (PETM) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, notable return on equity, reasonable valuation levels and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • PETM's revenue growth has slightly outpaced the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 4.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • PETSMART INC has improved earnings per share by 17.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PETSMART INC increased its bottom line by earning $3.55 versus $2.56 in the prior year. This year, the market expects an improvement in earnings ($3.96 versus $3.55).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, PETSMART INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the Specialty Retail industry average, but is less than that of the S&P 500. The net income increased by 12.0% when compared to the same quarter one year prior, going from $82.32 million to $92.22 million.
  • You can view the full analysis from the report here: PETM Ratings Report

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