UPDATE: Nomura Equity Research Downgrades PetSmart to Reduce, Lowers PT

In a report published Monday, Nomura Equity Research downgraded its rating on PetSmart PETM from Neutral to Reduce, and lowered its price target from $72.00 to $55.00. Nomura Equity Research noted, “We are lowering our opinion on PETM to Reduce from Neutral. After being staunch supporters for years with a Buy rating, we moved to Neutral in July 2012. Today we are taking a more cautious view. A reduction in our price target to $55 (from $72) anticipates multiple compression and lower estimates owing to ecommerce concerns, senior management change and margins that have reached a plateau. PETM is executing well. That, together with a valuable offering of Services, should keep shoppers loyal. Nonetheless, we worry that one of PETM‟s key competitive advantages may erode online. PETM is protected in the physical world as 70% of its food sales are not available at mass merchants. PETM margins have increased and we believe CEO to-be Lenhardt will lead PETM smartly.” PetSmart closed on Friday at $69.99.