WOOF Stock Forecast & Price Target

Petco Health and Wellness Co Inc has demonstrated strong operational momentum, highlighted by a year-over-year gross margin expansion of approximately 120 basis points, which surpassed forecasts due to contributions from both products and services. The company has effectively enhanced pricing and promotional strategies, achieving improved flow-through during the second quarter, alongside successful vendor negotiations and the strategic closure of unprofitable stores. Furthermore, management has raised its full-year adjusted EBITDA guidance, reflecting ongoing profitability improvements and a commitment to efficient inventory management, positioning the firm well for future growth despite external economic pressures.

Petco Health and Wellness Co Inc has experienced a decline in net sales of 2.3% year-over-year, which is indicative of ongoing market share loss, particularly in the e-commerce segment where heavy, commoditized products like pet food are primarily purchased online. Management's 3Q2025 guidance projects a low-single-digit decline in net sales, coupled with an adjusted EBITDA forecast of $92-94 million, reflecting continued margin pressure and challenges in vet hospital openings due to hiring difficulties. Additionally, a significant drop in the proportion of sales from supplies and companion animals, from approximately 44% in 2024 to just 34%, further underscores the company's vulnerabilities amid increasing competition from e-commerce players.