WOOF Stock Forecast & Price Target

Petco Health and Wellness has demonstrated strong operational momentum, reflected in a gross margin expansion of approximately 120 basis points year-over-year, primarily due to successful pricing strategies and improved service offerings. The company's strategic decisions, including the closure of unprofitable stores and enhanced vendor partnerships, have enabled an upward revision of full-year adjusted EBITDA guidance, indicating robust profitability improvements despite challenging external factors. Additionally, improvements in both product and service margins, coupled with effective inventory management, underscore a positive outlook for Petco as it positions itself for future growth.

Petco Health and Wellness has experienced a decline in net sales of 2.3% year-over-year, illustrating a significant loss of market share, particularly in the highly competitive e-commerce segment where heavy, commoditized products like pet food are easily purchased online. Despite a slight increase in full-year 2025 adjusted EBITDA guidance, management’s outlook for net sales in 3Q2025 indicates a continued downward trend, anticipating low-single-digit declines year-over-year and raising concerns about the company's growth prospects. Additional risks such as margin pressure from mix and channel shifts, challenges in vet hospital expansions due to hiring difficulties, and competitive threats from e-commerce peers further contribute to a negative backdrop for Petco's stock performance.