Deutsche Bank said Pets at Home Group PLC (LSE:PETS) is progressing through a retail turnaround, supported by tighter operating cost control and clearer acknowledgement of past ranging issues.
In a new note, the broker repeated a 'Buy' rating and lifted its price target to 230p from 215p.
Group revenue of £778 million fell 1.3% year-on-year, which Deutsche Bank said was in line with its estimates. Analysts also pointed to a strong like-for-like performance in the vets business at +6.7%, while retail declined 2.2%. Adjusted profit before tax of £36.2 million came in 10% above the bank’s £33 million forecast.
DB said this reflected disciplined cost management despite a 105 basis point decline in retail gross margin.
The reduction included targeted food price investment, weaker category mix and lower supplier income.
Guidance for FY26 adjusted profit before tax remains at £90 million to £100 million.
The bank noted this will follow exceptional restructuring costs of £6 million to £8 million, which are expected to deliver £20 million of savings in FY27. The interim dividend was flat at 4.7p. Pets at Home has completed half of its buyback and plans to finish the balance in the second half, it was highlighted.