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Deutsche downgrades PetSmart to Sell, shares -1.4% pre-market

  • Deutsche Bank downgrades PetSmart (PETM) to Sell from Hold with a PT of $65 from $73 previously, citing slowing traffic trends as a result of increased competition.
  • Analyst Mike Baker notes, "Comps have decelerated 6 quarters in a row, and we think they will remain in the 2% range going forward, primarily due to slowing traffic trends. In fact, we expect traffic to decline at some point in 2014 after growing just slightly over the last few quarters. The biggest driver to slowing traffic trends is increased online competition."
  • The analyst also thinks "gross margins may be impacted by more aggressive online pricing from PETM that we have seen in the past several months."
  • PETM -1.4% pre-market
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