WOOF Stock Forecast & Price Target

Petco Health and Wellness Co Inc has demonstrated a positive operational momentum, evidenced by an expansion in gross margin of approximately 120 basis points year-over-year due to contributions from both products and services. The company’s efforts in pricing optimization and closing unprofitable stores have enabled a raise in full-year adjusted EBITDA guidance, despite facing tariff-related challenges. Additionally, improvements in EBITDA margins, driven by better inventory management and efficiency in promotional strategies, underscore the potential for ongoing profitability and growth in the pet care sector.

Petco Health and Wellness has experienced a decline in net sales of 2.3% year-over-year, indicating potential ongoing market share loss, particularly with a 1.6% drop in comparable sales. The company's guidance for 3Q2025 suggests continued sales challenges, with expectations for net sales to decrease in the low-single digits year-over-year, alongside potential margin pressures stemming from a shift in product mix and channel dynamics. Additionally, the company's reliance on heavy, commoditized products, which are increasingly being purchased online, exacerbates concerns regarding its competitive position against e-commerce peers.