Petco price target lowered to $3.50 from $7.00 at RBC Capital

RBC Capital lowered the firm’s price target on Petco to $3.50 from $7.00 but keeps an Outperform rating on the shares. The company’s Q3 results were “soft as anticipated”, also driving a cut in FY23 EBITDA guidance, the analyst tells investors in a research note. RBC adds that it “appreciates” Petco’s shift to value and cost savings, but also expects the company’s gross margin to continue to contract until the consumer backdrop improves. The firm notes however that if the company’s top-line continues to bump along the bottom and doesn’t materially worsen, much of the demand risk is “already baked into buy-side expectations”.