Petco Health And Wellness: A Turnaround May Be Materializing (Rating Upgrade)

Petco Health and Wellness Company, Inc. reported good turnaround signals in Q4. Sales are finally guided to start to stabilize in FY2026. Profitability has continued to gain from improved efficiency, and WOOF's fair earnings momentum looks to last in upcoming quarters as well. While high debt makes WOOF stock a volatile investment, I believe that the valuation brings a good risk-to-reward. I estimate 45% base scenario upside to $5.25.