Tuesday, Credit Suisse upgraded Petsmart Inc. (PETM) shares to Outperform from Neutral and increased its price target to $29 from $25.
Analyst Balter believes PETM offers a level of safety given its consumable exposure, as well as more cyclical upside from its hard goods/services businesses than most give it credit for. The analyst has yet to see a turn in those discretionary businesses, but believes its nearing an inflection point based on a number of recent data points, providing a significant comps and margin opportunity.
The analyst said that combined with the leverage potential from slower growth and other internal initiatives, a tame competitive environment, strong cash flow/share repurchases, and greater consistency in results, PETM seems well positioned for 2010.
The analyst's Pet Food Input Price Index points to inflation accelerating in 2010, a positive for comps if passed through. But perhaps even more important is what happens with traffic, the key driver of this stock historically.
A number of positive signs: the analyst's Pet Supply Leading Comps Indicator suggests PETM comps should be accelerating, reflecting more favorable housing trends, gas demand (indicating better miles driven trends), and improving consumer confidence, and recent supplier data that shows an uptick in hard goods, a positive for PETM sales and margins.
Currently, PETM is up $0.65 or 2.56% and trading at $26.03.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.