PetMed Express, Inc. (PETS)

PETS reveals no economic moat, but recent bad news has produced an opportunity

Last trading 
$23.51
Fair Value
Range
$30 to $34
Uncertainty
Medium
Enterprise
Value
$394m
Consider Buy
$18
Economic Moat
Weak to None
Stewardship
Rating
Standard
Market Cap
$487m

Recommendation

At $23.50, PETS is undervalued and we recommend a BUY.

A combination of short-term guidance misfires and PetSmart’s acquisition of Chewy has caused market-wide panic, float short % to skyrocket, and PETS’ market cap to halve over the past 9 months.
A price correction was deserved but the market has overreacted. PETS’ price-implied-expectations (discussed later in detail) indicate a contraction in sales growth and margins that defy rationality.

Our analysis indicates a fair value range of $30 to $34, with an expected return of 4.5% to 7.2% CAGR over the next five years.
A target price of $16 to $18 would upgrade this recommendation to STRONG BUY.

For full report, see link below:

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s