LOS ANGELES (AP) — Shares of Petsmart Inc. hit a new 52-week high on Thursday, a day after the retailer reported strong second-quarter earnings and raised its outlook. Analysts raised their price target on the stock as well.
THE SPARK: The company reported after the market closed on Wednesday that its net income grew 28 percent in its fiscal second quarter to $78.5 million, or 71 cents per share. That compares to net income of $61.2 million, or 54 cents per share, a year earlier. Revenue increased 9 percent to $1.62 billion.
The latest results beat Wall Street expectations for earnings of 65 cents per share on $1.6 billion in revenue, according to FactSet.
Petsmart raised its annual profit guidance for the second time this year. The company now forecasts net income of $3.30 to $3.40 per share, and it expects revenue to grow 10 to 11 percent, which implies $6.72 billion to $6.79 billion. In May, Petsmart raised its estimates to $3.19 to $3.31 per share in net income, and set a revenue growth target of 9 to 10 percent.
Analysts are estimating income of $3.30 per share and $6.71 billion in revenue.
THE BIG PICTURE: Petsmart operates more than 1,200 stores in North America.
THE ANALYSIS: Wedbush analysts Joan Storms and John Garrett said in a research note published Thursday that Petsmart is well-positioned with its mix of consumables, growing focus on new and exclusive merchandise and marketing to build its brand and draw customer traffic. That should help offset potential weakness in consumer spending, they wrote.
The analysts maintained their "Outperform" rating on Petsmart's shares and raised their price target on the stock to $78 from $70.
SHARE ACTION: Shares rose $2.85, or 4.2 percent, to $70.29 in afternoon trading. Earlier in the session the stock reached a new 52-week high of $72.50.