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The bank said it sees near-term profit and loss headwinds for the stock, adding that there is a long-term market share risk.
“We think Petco has lost much of its competitive bite,” stated analysts. “Its market share has eroded meaningfully (from 7% in 2015 to 4% today) as consumers have migrated to online (Amazon, Chewy) and broadline competitors (Walmart) with greater convenience and/or value offerings.”
They added: “We expect weak P&L for Petco to deteriorate further into the first half of this year, adding to eleven straight quarters of declining
profitability.”
The investment bank added that another worrisome sign is Petco having slowed opening new vet hospitals, an initiative that helps lift sales and differentiate the company vs. peers.
