Shares in veterinary services firm Pets At Home (PETS) surged 16% to a new all-time high of 355p after it revealed that earnings for the full year would beat expectations due to strong second-half trading.
The company said that thanks to the ‘sustained strength in performance’ of both its retail and veterinary operations since its last trading update at the end of July, it now expects full year underling pre-tax profit to be ahead of current market forecasts.
LEADER OF THE PACK
Pets At Home is the UK’s largest omni-channel (physical and online) specialist pet-care provider, offering pet food, health and hygiene products and grooming services. Sales for the retail business were £938 million in the last financial year.
Its Vet Group division operates through a combination of company-owned and joint-venture practices, and also has a network of specialist referral hospitals for its own and third-party veterinary practices. Sales last year were £121 million.
In its first quarter trading update at the end of July, the firm said it had seen sales momentum ‘returning across all areas of the business, reflecting normalisation of shopping habits amongst customers as well as the re-instatement of services and permitted procedures across our retail and veterinary operations.’
Today’s update shows this momentum continued into the second quarter with ‘double-digit like-for-like growth in customer sales into and through the eight weeks to 10 September.’
ANALYSTS CHASING THEIR TAIL
The current consensus for full-year earnings is £73 million, which would represent a drop of 22% on last year’s underlying pre-tax figure, but today’s update will inevitably spur a further round of upgrades.
Analysts have been struggling to keep up with the company’s exceptionally-strong growth this year. Brokerage Shore Capital is currently forecasting full year pre-tax earnings of £68.8 million, below the market consensus, and recently downgraded its recommendation on the stock from Buy to Hold based on the recent share-price performance.
Last month investment bank Liberum raised its estimate for current year pre-tax profits by 16% to an above-consensus £80.4 million, citing the ‘truly impressive turnaround’ in the firm’s retail business, but admitted its forecasts for the next couple of years ‘may well prove too cautious.’
