PetIQ Stock In Doghouse Monday, But Raymond James Remains Bullish

PetIQ Inc. (NASDAQ: PETQ) shares fell sharply Monday as at least one analyst adjusted earnings expectations for the pet health products company and lowered stock price expectations.

The Analyst

Raymond James analyst Joseph Altobello maintained an Outperform on PetIQ and lowered the price target from $42 to $39.

The Thesis

Altobello reduced his 2019 adjusted EBITDA estimate ahead of the company’s release of fourth quarter and full-year 2018 results —  and 2019 guidance — expected March 11.

Despite lowered expectations for adjusted earnings, Altobello cautioned against putting PetIQ stock in the doghouse just yet in a Friday note. 

The continued Outperform rating reflects Raymond James’ belief that PetIQ remains positioned for double-digit net sales and earnings growth for the foreseeable future, the analyst said, adding that its acquisition of VIP Petcare was a good pickup.

Altobello’s net sales estimate of $609 million, representing an 18-percent year-over-year increase, remains unchanged.

The revised EBITDA estimate and resulting lower price target reflect a prior estimate that Altobello said was too aggressive. The new estimate “still implies fairly healthy upside” of over 30 percent from Friday’s closing stock price, he said. 

Price Action

PetIQ shares were down 8.69 percent at $27.02 at the close Monday. 

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