Berenberg hikes Pets at Home price target

Berenberg lifted its price target on Pets at Home on Wednesday to 430p from 370p and reiterated its ‘buy’ recommendation as it said the upgrade cycle wasn’t over.

The bank said the retailer’s continued strong momentum should go some way to allaying fears regarding the impact of the post-Covid normalisation in pet spending and the difficult macroeconomic backdrop.

"Furthermore, although the recent upgrade leaves FY23 expectations well set, we believe that further upgrades are likely moving into FY24, while an attractive medium-term equity story remains," it said.

Berenberg said there are a number of factors that make Pets an attractive medium-term story.

These include: a favourable underlying market, with Euromonitor forecasting the UK pet care market to grow by 3-5% per year in the coming years; well-executed strategic initiatives, including ongoing momentum in its Puppy & Kitten Club membership scheme; a high-growth, high-margin vet business; and balance sheet optionality.