Goldman Sachs Raises Estimates on PetSmart

Goldman Sachs has increased its price target and EPS estimates on PetSmart PETMdue to PETM's positive outlook. In a note to clients, Goldman Sachs writes, "EPS of $0.38 vs. $0.31 a year ago beat our $0.37, and met consensus, but were aided by a lower tax rate to the tune of 1.5c; EBIT tracked nominally light of guided levels. Expenses tracked above our expectations, and inventory rose well above recent trend. That said, traffic growth surged, the gross margin trajectory continues to improve, and the firm's capital discipline, focused on buybacks and dividends, remained largely intact. Expense increases were driven largely by a return to typical seasonality and do not concern us." GS has raised its 2010E EPS to $2.00 and 2011E went up from $2.27 to $2.33. The price target has icreased from $38 to $41 because of higher earnings estimates. PETM closed Wednesday at $38.28.