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NEW YORK — Falling margins and weakening sales prompted a Credit Suisse analyst to downgrade PetSmart Inc. to "Neutral" from "Outperform" on Thursday.
Gary Balter also trimmed the pet supplies retailer's price target to $21 from $23, saying in a client note that the company's decision to lower it profit forecast for the second half of the year also led to the ratings cut. PetSmart closed at $22.57 on Wednesday.
"(The reduced earnings outlook) points to weaker-than-expected margins in the key hard goods category for Christmas as well as more competitive pressures than previously projected," he wrote.
Hardgoods merchandise includes pet supplies such as collars, leashes, health care supplies, grooming and beauty aids, toys, and apparel, as well as pet beds and carriers.
David Strasser of Janney Montgomery Scott was a bit more upbeat, citing the Phoenix-based company's solid balance sheet. He reaffirmed a "Neutral" rating.
