Pets at Home is an investment for the long term
PETS AT HOME (PETS) 306.8p
Gain to date: 44%
Original entry point: Buy at 213p, 5 September 2019
OUR ‘BUY’ CALL on Pets at Home (PETS) is now 44% in the money, shares rallying following a very well received first quarter trading statement (31 Jul) which highlighted recovering momentum after the lockdown restrictions started to ease.
The pet care specialist saw exceptional demand in the closing weeks of the year to 26 March, as the pandemic prompted pet owners to stockpile food and basic medicines. Online was the star performer of the quarter, with sales up 71% year-on-year.
Pets at Home faces short-term headwinds, including increased operating costs to cope with social distancing measures and there is uncertainty on the risk of a second lockdown. While the shares have had a strong run and there is no immediate catalyst for upgrades, the long-term outlook remains positive.
There is increasing demand for pet ownership in the UK, as people adopt new attitudes to work and leisure pursuits, which is reflected in Pets at Home’s burgeoning band of loyalty card members and subscription customers, and Pets at Home is winning share in a structural growth market.
SHARES SAYS: Pets at Home will survive Covid-19 and emerge stronger thereafter. The shares remain a good long-term investment.