Deutsche Bank Reiterates Hold Rating on PetSmart (PETM)

Deutsche Bank is out with a research report this morning, where it reiterates its Hold rating on PetSmart Inc. PETM; it has a $36.00 price target on the stock. The DB analysts cited the company’s recent earnings report, which was better than expected on better gross margins and higher operating leverage. The analysts believe that the improving trends the company is seeing is balanced with a in-line valuation. The analysts noted that the company saw a rebound in traffic, a rebound in hard good comps, solid cost controls, and merchandise resets to higher sales of better good. As for valuation, the analysts remarked, “Our price target is based on 16x (from 17x) our revised FY11 forecast, in line with our group average target multiple. Downside risks include greater than expected deflation and continued softness in hardgoods. A rebound in adoptions, improving trends in the services business, and stabilizing prices are risks to the upside.”