Petco (Nasdaq: WOOF) spent most of the past two years fighting for survival. Debt was pressing, sales were sliding, and the turnaround timeline kept getting pushed. Now, management says the heavy lifting is done — and at least one Wall Street firm believes them.
Jefferies upgraded the stock from “Hold” to “Buy” on Thursday, pushing its price target to $5 from $4.05. The upgrade came days after Petco reported Q4 results that included a small revenue beat — $1.52 billion against analyst estimates of $1.51 billion — and profitability that came in ahead of its own targets, despite a per-share loss of one cent that narrowly missed consensus.
The story is less about the quarter and more about what management outlined for the year ahead. CEO Joel Anderson called the new phase “Reach for the Sky,” framing it as a deliberate pivot from cost-cutting to growth.
“In fiscal 2025, we strengthened our leadership team and rebuilt the foundation of our economic model, enabling us to exceed our profitability goals,” Anderson said. “With that work largely complete, we are entering the next phase of our strategy focused on driving sustainable, profitable top-line growth.”
In practical terms, that means expanding fresh and frozen food offerings, bringing in more than 25 new brands and flavors, and leaning harder into services like grooming and veterinary care.
Management noted that 50% of dog customers currently don’t buy food from Petco — a data point that, if converted even partially, represents a meaningful revenue opportunity through cross-selling.
Jefferies analyst Kaumil Gajrawala argued the stock trades at a discount to peers and that planned initiatives do not rely on a macro recovery. He also highlighted the balance sheet work already done: $1.5 billion in debt was refinanced to a mix of floating and fixed rates in February, with maturities pushed out to 2031. Cash stands at $257 million with its revolver untapped.
The stock surged roughly 30% on Thursday, though it’s worth noting it had recently printed a 52-week low. MACD remains bearish and the RSI sat in neutral territory post-rally, suggesting the momentum is a snapback rather than a confirmed trend reversal. Goldman Sachs also reiterated a bullish stance, maintaining a $3.95 price target.
The more skeptical read: with revenue still down 2.4% year-over-year, one quarter of operational improvement and a collection of analyst upgrades do not yet confirm a durable recovery. The next few quarters will matter far more than Thursday’s surge.