UPDATE: Bank of America Downgrades PetSmart to Neutral, Lowers PT on Increased Caution on NT Momentum

In a report published Friday, Bank of America analyst Denise Chai downgraded the rating on PetSmart (NASDAQ: PETM) from Buy to Neutral, and lowered the price target from $90.00 to $80.00.In the report, Bank of America noted, “We are downgrading PETM from Buy to Neutral and lowering our PO to $80, based on 17.5x 2014 P/E (19x prior). We see multiple headwinds to comp-store growth and valuations, namely 1) market share losses, 2) slower momentum in in-store adoptions, 3) sentiment overhang from online competition longer-term, and 4) slower-than-expected new household formation is delaying a recovery in high-margin hardgoods. While we are positive on PETM's continued product resets, we think they are unlikely to fully offset the headwinds. Our new estimates are as follows: 2013 is now $3.96 based on 3.4% comps ($3.98 on 3.5% comps prior); 2014 is $4.57 on 3.5% comps ($4.72 on 4.5% comps prior); and 2015 is $5.26 also on 3.5% comps ($5.57 on 4.5% comps prior). Given that valuations largely track comps, we believe share performance will be lackluster until comps re-accelerate.”PetSmart closed on Thursday at $72.80.