Berenberg lifts Pets at Home price target

Berenberg lifted its price target on Pets at Home on Wednesday to 460p from 430p as it said the company’s strong momentum continued through Q423, "meaning a further removal of concerns around the impact of the weak consumer backdrop and a potential post-Covid-19 normalisation in pet spend".

It noted that Pets delivered like-for-like revenue growth of 11.1%, with a strong performance across both the retail division and the vet group. Pre-tax profit of £136.4m was a touch ahead of January’s guidance of towards the upper end of £126m to £136m, it said.

The bank, which rates the shares at ‘buy’, said it continues to see solid upside to FY24 pre-tax profit estimates, and reckons a sum-of-the-parts analysis illustrates a re-rating opportunity.

"We believe there is a re-rating opportunity, noting: i) Pets’ strong competitive positioning in a favourable category; ii) that earnings may well be too low; and iii) that the company’s net-cash position provides continued balance sheet optionality.

"We roll forward our SOTP valuation to CY24 and increase our price target to 460p."

Berenberg said Pets remains one of its top picks in UK retail.