On the heels ofbetter-than-expected Q4 results from PetSmart (PETM) and a bright 2010 forecast last night, Credit Suisse analyst Gary Balter today raised his price target on the stock to $35 from $29, writing that the “stars appear to be aligning for PetSmart.”
The shares are up $2.21, or 8%, at $29.92.
The stock is cheap, he thinks, at 6 times enterprise value as a multiple of Ebitda, and he sees parallels to Home Depot (HD), which also forecast the year above estimates recently, and that has an “internal improvement and focus story” that is beginning to show up in PetSmart’s plans.
This year’s results could turn out even better if the higher-margin “hard goods” category starts to pick up, and if inflation, which is not factored into last night’s forecast, finds its way into prices later this year.
Balter has an estimate of $1.85 in EPS for the year, higher than PetSmart’s outlook.
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