The firm increased the price target to $74 from $60 for the pet products and services company.
Deutsche Bank said the company is still fundamentally challenged, but stock has underperformed and has several non-fundamental catalysts that could support shares.
Private equity firms reportedly preparing bids for PetSmart; watch the video below for details:
Must Read: Warren Buffett's 25 Favorite Stocks
"We think PETM is still fundamentally challenged as it absorbs increased competitive pressures primarily from online competition," said Deutsche Bank research analyst Mike Baker.
Shares of PetSmart closed up 1.76% to $71.64 on Thursday.
Separately, TheStreet Ratings team rates PETSMART INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate PETSMART INC (PETM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, notable return on equity, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."