PetMed Express: Good Entry Point

Before the bell today, PetMed Express (PETS - Analyst Report) reported solid results for the third quarter of fiscal 2009. The company had sales of $43.4 million, up 16% over the third quarter of fiscal 2008, and earnings per share of $0.21, up 15% over the year-ago quarter. Sales were slightly above the Zacks consensus estimate of $43 million, and its EPS beat the Zacks consensus by $0.01.

That said, even PetMed couldn’t completely escape the clutches of consumer tightening their belts. The company’s third quarter gross margin decreased by 70 basis points year-over-year (and was 30 basis points lower than our forecast), but the company was able to reduce its general and administrative expense by 40 basis points to help offset its lower gross margin.

Given its solid sales trends in a difficult environment, cost-cutting efforts, and clean balance sheet ($44 million in cash and $0 debt), PetMed Express remains an attractive stock. We view today’s sell-off as good entry point. We maintain our Buy rating and target price of $21.

Read the full analyst report on PETS