Citi downgrades Petco into results on weakening consumer

Citi analyst Steven Zaccone downgraded Petco (WOOF) to Neutral from Buy with a price target of $11, down from $15. The analyst reduced estimates below the Street ahead of the company’s Q4 report to reflect continued discretionary spending weakness and the potential for trade down in pet food. Petco shares may be "range bound at best" as further pressure is put on the model from the weakening consumer backdrop, the analyst tells investors in a research note. The firm believes Petco lacks a "positive catalyst for multiple expansion" until the macro environment improves. Citi continues to prefer Tractor Supply (TSCO) for pet exposure given the company’s "balanced assortment that can benefit from ‘trade-down’ and growth initiatives driving incremental top-line growth today."