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PetMed Express, Inc. (PETS) - free report >>
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PetMed Express, Inc. (PETS) - free report >>
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PetMed Remains Strong on New Order Sales; Reorder Dips
On Aug 29, 2016, we issued an updated research report on PetMed Express (PETS - Free Report) . This nationwide pet pharmacy presently carries a Zacks Rank #2 (Buy).
PetMed exhibited a better-than-expected earnings performance in first-quarter fiscal 2017, while revenues missed estimates. We are impressed with the fact that after continued drag in new order sales, the last three quarters saw a turnaround in the number, primarily on the back of aggressive pricing.
In the first quarter, new order sales increased 10% to $13.3 million largely driven by aggressive pricing. Average order size remained unchanged at $82 from the year-ago period. Additionally, the company is focusing on issues like limited consumer spending and a change in product mix to lower priced items, mainly generics. The company is also advising veterinarians to prescribe more of their brands.
Although we are encouraged by PetMed’s efforts to revitalize the top line, barring the last three quarters, new order sales have been persistently sluggish over the last few quarters, impacted by a reduction in advertising. Although the company is optimistic about the latest increase, the sustainability of this growth remains a concern.
Besides, after two quarters of significant increase, reorder sales faced a setback in the first quarter of fiscal 2017. Reorder sales were down 0.7% year over year to $59.2 million. Meanwhile, the company continues to be stressed in the competitive and fragmented pet medications market.
Key Picks from the Sector
Medical stocks such as IDEXX Laboratories, Inc. (IDXX - Free Report) , Masimo Corporation (MASI - Free Report) and Natus Medical Inc. , all sporting a Zacks Rank #1 (Strong Buy), are expected to do well over the short term.
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