It's been a sad week for Petco Health and Wellness Company, Inc. (NASDAQ:WOOF), who've watched their investment drop 14% to US$1.95 in the week since the company reported its annual result. Revenues came in at US$6.3b, in line with expectations, while statutory losses per share were substantially higher than expected, at US$4.78 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, Petco Health and Wellness Company's 15 analysts are forecasting 2025 revenues to be US$6.13b, approximately in line with the last 12 months. Losses are predicted to fall substantially, shrinking 96% to US$0.21. Before this latest report, the consensus had been expecting revenues of US$6.13b and US$0.24 per share in losses. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading their numbers and making a notable improvement in losses per share in particular.
Even with the lower forecast losses, the analysts lowered their valuations, with the average price target falling 7.7% to US$3.00. It looks likethe analysts have become less optimistic about the overall business. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Petco Health and Wellness Company, with the most bullish analyst valuing it at US$6.00 and the most bearish at US$1.00 per share. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that revenue is expected to reverse, with a forecast 2.0% annualised decline to the end of 2025. That is a notable change from historical growth of 8.6% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 5.0% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Petco Health and Wellness Company is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Petco Health and Wellness Company's revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Petco Health and Wellness Company going out to 2027, and you can see them free on our platform here..
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Petco Health and Wellness Company , and understanding it should be part of your investment process.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.