Petco Heath & Wellness Co. Inc. (WOOF) PT Raised to $3.50 at Evercore ISI, 'Margins Trained. Now Chasing Growth'

Evercore ISI analyst Oliver Wintermantel raised the price target on Petco Heath & Wellness Co. Inc. (NASDAQ: WOOF) to $3.50 (from $3.00) while maintaining a In Line rating.

The analyst comments "Petco’s 4Q25 print marked the turn from stabilization to planned reacceleration, with sales in line, EBITDA ahead, and a setup for 2026 comp inflection. 4Q revenue declined 2.4% (comp -1.6%) as WOOF continued to exit unprofitable volume and lap store closures, but profitability again outpaced expectations. Gross margin expanded despite sequential tariff pressure, SG&A leveraged, and EBITDA grew double digits. Importantly, FY25 closed with a 21% EBITDA increase and a 276% jump in FCF, driving leverage down to 3.0x from 4.2x a year ago. With Phase 1 & 2 largely complete, management formally pivoted to Phase 3 – “Reach for the Sky” – built around four growth pillars spanning product newness, owned brands, services scale, store engagement, and omnichannel loyalty. FY26 guidance implies a return to positive comps (~+1-2% range) with EBITDA growth modestly outpacing sales (+3.9% vs +0.8% in our model). The reset is largely complete; execution on growth now becomes the central debate. Until that proof emerges, upside remains limited. A 6x multiple on our 2027e EBITDA of $436mn (incl. SBC) supports a $3.50 Base Case valuation."

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