Goldman Sachs Remains Bullish on Petco (WOOF) With $3.95 Price Target

Core Viewpoint - Goldman Sachs maintains a bullish outlook on Petco (WOOF) with a price target of $3.95, which is higher than the consensus target of $3.42 among Wall Street analysts [1]. Group 1: Price Target and Stock Performance - Goldman Sachs has set a price target of $3.95 for Petco, down from a previous target of $4.53, indicating potential upside from the current trading price of approximately $3.44 [1]. - Petco's stock has surged nearly 48% over the past week and 37% over the past month, with a year-to-date increase of over 20%, although it remains below its 52-week high of $4.50 [1]. Group 2: Financial Performance and Operational Improvements - Petco reported a Q4 adjusted EBITDA of $106.29 million, exceeding both company guidance and consensus estimates, with an adjusted EBITDA margin expansion to 7.0% from 6.2% year-over-year [1]. - The leverage ratio improved significantly from 4.2x to 3.0x, reducing financial risk, while cash on the balance sheet increased by 54.89% year-over-year to $256.736 million [1]. - Full-year FY2026 adjusted EBITDA guidance is set at $415 million to $430 million, reflecting management's confidence in sustaining profitability gains [1]. Group 3: Key Drivers for Future Growth - For Petco to reach the $3.95 price target, it needs to achieve positive comparable sales, continue EBITDA margin expansion, and stabilize the broader consumer environment [1]. - The current consumer sentiment, as measured by the University of Michigan, is at a pessimistic level of 56.4, indicating that recovery in comparable sales is contingent on improvements in consumer sentiment [1].