Bark Inc’s 24% share-price advance on Tuesday prompted Jefferies analysts to slap a ‘Hold’ rating on the stock but still see 42% upside for the dog-centric products and services company.
"Discretionary toy demand is still challenged; however, several actions to drive efficiency should cleanup operations and deliver consistent profitability, better positioning the company," the analysts wrote in a note to clients.
They added that management hinting at further retail distribution for treats is positive, but it is early as pet owner uptake may take a while as awareness needs to build first.
Analysts at Jefferies noted that consolidating web platforms, reducing fulfillment centers, and focusing on marketing efficiency are examples of changes that will cut costs and boost margins at Bark.
They also believe Bark returns to top-line growth (+6%) in fiscal 2025 on new retail wins and delivers a full year of positive Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), estimated at $4 million.
Shares of Bark closed 3.7% lower to $0.92 on Wednesday.