Petco shares soar on 4Q/2026 earnings, driven by services, fresh food, and tarantulas

Shares of Petco, a pet-supplies retailer, jumped 34.6% on Thursday after the company improved its outlook for 2026 and said it expects sales to rebound, helped by an expanded assortment of services and pets sold in stores – with tarantulas seen as a new pet trend in the U.S. Jefferies raised its target price for Petco stock, saying the shares do not reflect the progress made so far or the potential for further changes and trade at a discount versus peers.

Petco Health & Wellness shares surged 34.6% on Thursday to $3.28 per share. The stock had already started moving higher in after-hours trading on Wednesday, gaining about 5.4%.

Petco CEO Joel Anderson said the company’s outlook for this year “assumes a return to positive comps,” meaning comparable-store sales at stores open at least a year. Petco guides for 2026 net sales to be flat to up 1.5% year over year. The middle of that range was a bit better than analysts’ expectations, MarketWatch noted. In 2025, revenue fell 2.5%.

Petco expects sales to rebound by expanding the assortment of animals sold in its stores. Anderson said spiders, particularly tarantulas, are seen as a new pet trend in the U.S. The company also plans to add more fresh-food selections this year, bring in new nationally sold brands, and focus more deeply on its store brands. Petco plans to expand its hospitals business, while also saying it expects to have around 15-20 fewer stores overall this year.

Petco said its net loss narrowed to $2.6 million in the fourth quarter from $13.8 million in the same period of 2024. Adjusted EBITDA increased 10.6% to $106.3 million, well above the company’s own outlook. Revenue fell 2.4% to $1.51 billion.

The company said free cash flow for 2025 increased 276.3% to $187 million. CFO Sabrina Simmons said the company made significant progress toward lowering its leverage ratio “from 4.2X when we entered the year to 3X at the end of 2025.”

On Thursday, Jefferies upgraded Petco Health & Wellness shares to “buy” from “hold” and raised its target price to $5.00 from $4.05 per share – one of the highest valuations on Wall Street. Jefferies analyst Kaumil Gajrawala argues that Petco shares trade at a discount versus peers, and their price does not reflect the progress made so far or the potential for further self-help improvements. “Cross-selling with vet/grooming, driving own-brand food/supplies, expanding vet clinics/Rx, and unveiling an updated loyalty program are drivers long-term, we think,” he wrote.

Petco shares have gained 15% year to date. Wall Street remains cautious: according to MarketWatch data, five of nine analysts rate the stock “hold,” versus two “buy” and two “sell” recommendations. The average target price is $3.43 per share, implying upside of just under 6%.