Credit: Shutterstock photoPet products retailer PetSmart, Inc. ( PETM ) on Monday caught a big downgrade from analysts at Nomura Securities.
The firm lowered its rating on PETM from "Buy" to "Neutral" with a $70 price target. That target suggests only a small upside to the stock's Friday closing price of $68.19.
A Nomura analyst commented, "Ever since reporting strong Q1 results, PETM shares have sustained prices very near our $70 price target. Probably the best part of the PETM investment case is the industry in which it operates. Valuation is the highest PETM has seen in over 5 years. The upside risk to the story is that PETM gains meaningful traction with initiatives like price and space optimization and that it continues to innovate in the premium arena. The downside risk centers on competition, especially with respect to ecommerce. In all, the risk/reward appears to be balanced. With multiple expansion unlikely from these levels, we think PETM's share price performance may become more modest."
PetSmart shares were mostly flat in premarket trading Monday.
The Bottom Line
Shares of PetSmart ( PETM ) have a .97% dividend yield, based on Friday's closing stock price of $68.19. The stock has technical support in the $63-$65 price area. The stock is trading near all-time highs.
PetSmart, Inc. ( PETM ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.