LONDON (ShareCast) - (Sharecast News) - Analysts at Citi bumped up their profit estimates and target price for shares of Pets at Home Group, highlighting both its "strong" market share and structural market growth which might pave the way for the generation of excess capital.
The broker also highlighted the strong new customer growth seen during COVID and the company's "low" balance sheet leverage.

Ironically, sales comparables could prove a headwind in the fourth quarter, but supported by investment the businesses' "strong" pet care ecosystem "should continue to drive opportunities to capitalize on new and existing VIP customers."

In turn, low leverage meant that Pets at Home "should have strong flexibility to react to a deterioration in consumer outlook, to invest or to return excess capital to shareholders."

Citi raised its estimate for the company's profits before tax in 2021 by 20% to £91m and those for 2022 and 2023 by 13%, resulting in a higher target price of 460.0p, versus 355.0p beforehand at an estimated price-to-earnings multiple of approximately 24 for 2022.

The broker stood by its 'buy' recommendation for the stock.

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