PetSmart (PETM) Rated Hold By Deutsche Bank Securities

Deutsche Bank Securities analysts Mike Baker and Adam Sindler rated shares of PetSmart Inc (Nasdaq: PETM) a Hold, with a price target of $36 per share.

The analysts said that the rise of sales and earnings expectations for 2010 is primarily driven by the flea and tick business.

However, PetSmart Inc's flea and tick business has lower margins than consumables.

The Deutsche Bank Securities analysts wrote, "the primary gross margin drivers are leverage on fixed costs and better margin rates due to cycling last year's markdowns. Merchandise margins are likely to be down in 2Q as mix shifts more towards flea and tick, but should be up in the back half as this business is seasonally less important. Promotional actively has been consistent."

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