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PetMed Rides on Solid Reorders & New Orders Amid Competition

Zacks Equity Research

On Dec 29, we issued an updated research report on PetMed Express, Inc. PETS. The stock sports a Zacks Rank #1 (Strong Buy).

Over the last three months, shares of PetMed have been trading above the broader industry. The company has surged 33.1% compared with the broader industry’s 7.4% growth.

In second-quarter fiscal 2018, the company once again topped the Zacks Consensus Estimate on both revenues and earnings. We are also encouraged to note the stellar increase in reorder and new order sales in the period.

PetMed Express, Inc. Price

PetMed Express, Inc. Price | PetMed Express, Inc. Quote

PetMed is striving to implement several strategies to revitalize its top line including its focus on advertising efficiency to boost new order sales as well as its sales shift to higher margin items while expanding the product portfolio.

However, we are apprehensive about the escalating advertising expenses incurred in fiscal second quarter. The company spent $4.5 million on advertising compared with $4.4 million for the same quarter last year.

The company markets its products, primarily under well-known brands of medication namely, Frontline Plus, K9 Advantix, Advantage, Heartgard Plus, Sentinel and Interceptor et al.

On the flip side, PetMed operates in a highly competitive and fragmented pet medications market with veterinarians, traditional retailers, other mail-order and online retailers of pet medications plus other health products dominating the space as its key competitors. Also, Eli Lilly and Company’s acquisition of Novartis' animal health division has led to more challenges for PetMed.

Other Key Picks

Some other top-ranked stocks from the broader medical space are Akari Therapeutics PLC. AKTX, Protagonist Therapeutics Inc. PTGX and XOMA Corporation XOMA, each sporting the same bullish Zacks Rank of 1 as PetMed. You can see the complete list of today’s Zacks #1 Rank stocks here.

Akari has a projected growth rate of 88.89% for the next quarter. The earnings surprises delivered by the company have been positive in the last three quarters with an average beat of 88.6%.

Protagonist has an expected earnings growth rate of 36.9% in 2017. The stock has soared an impressive 80.6% in the last six months.

XOMA is expected to score an impressive earnings growth rate of 99.2% in 2017. The stock has skyrocketed a whopping 406.4% in the last 6 months, despite a loss of 1.7% incurred by the broader industry.

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PetMed Express, Inc. (PETS) : Free Stock Analysis Report
 
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