Goldman Sachs is maintaining its Buy rating on shares of PetSmart, Inc. PETM.
“We maintain our Buy rating; we expect PETM to exceed consensus forecasts as the firm benefits from ongoing merchandising enhancements, without margin headwinds from product mix for the first time in several year,” Goldman Sachs writes.
“Moreover, we expect slow and steady inflation in high-end pet food to aid sales visibility. These drivers have been evident for several quarters, but the company has fallen short of Street forecasts on expense misses; we expect a better reception as PETM delivers against street forecasts. Confirmation of pending price hikes from food vendors suggests that inflation could exceed the 1% embedded in our forecast for 4Q11; in the past, inflation typically contributed to solid sales increases.”
PetSmart closed Friday at $42.18.
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