Goldman Sachs Remains Bullish on Petco (WOOF) With $3.95 Price Target

"Goldman's conviction rests on Petco's Q4 adjusted EBITDA of $106.29M, which came in above both company guidance and consensus estimates. Adjusted EBITDA margin expanded to 7.0% from 6.2% a year ago, signaling that management's cost restructuring is translating into durable profitability gains rather than one-time improvements. The firm views this as evidence that the operational reset under CEO Joel Anderson is on track."

"Full-year FY2026 adjusted EBITDA guidance of $415M-$430M reflects management's confidence in sustaining gains. Free cash flow nearly doubled year-over-year to $186.953M for the full year, providing a buffer to service debt and reinvest without diluting shareholders. The leverage ratio improved sharply from 4.2x to 3.0x, reducing financial risk."

Petco Health & Wellness (WOOF) has experienced significant momentum, surging 48% over the past week and 37% over the past month, trading around $3.44 as of March 13. While most Wall Street analysts maintain a Hold rating with a consensus price target of $3.42, Goldman Sachs maintains a Buy rating with a $3.95 target, lowered from $4.53. Goldman's conviction stems from Q4 adjusted EBITDA of $106.29M exceeding guidance and consensus, with margins expanding 80 basis points to 7.0%. The company's operational restructuring has improved leverage from 4.2x to 3.0x, doubled free cash flow to $186.953M, and increased cash reserves 54.89% to $256.736M, demonstrating sustainable profitability gains rather than temporary improvements.

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