Benzinga | Mar 19, 2021 10:37AM EDT

Petco Barks Up The Right Tree, Gets Upgrade from BofA Analyst

After posting robust fourth-quarter results, Petco Health and Wellness Company Inc (NASDAQ:WOOF) has been witnessing continued elevated pet adoption trends, according to BofA Securities.

The Petco Analyst: Elizabeth Suzuki upgraded the rating for Petco from Neutral to Buy, while maintaining the price target at $28.

The Petco Thesis: With people spending more time at home amid the COVID-19 pandemic, there has been accelerated adoption of new pets, which is expected to "provide a multi-year tailwind for specialty pet supply retailers," Suzuki said in the upgrade note.

She expects the elevated adoption rates to continue "even in a post-vaccine environment," with a large percentage of people still working from home or transitioning to a "hybrid home/office schedule" and a rise in demand for homes with more space.

Petco is poised to benefit from "industry-demand tailwinds, recovery in services as markets reopen, and longer-term growth across the chain's services, online, and in-store merchandise offerings as new customers become multi-channel shoppers," the analyst further wrote.

WOOF Price Action: Shares of Petco had risen by 2.97% to $23.20 in premarket trading Friday.

(Photo by Jay Wennington on Unsplash)