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PetMed (PET) Focuses on Advertising to Boost New Order Sales

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On Feb 26, we issued an updated research report on PetMed Express, Inc. (PETS - Free Report) . The stock carries a Zacks Rank #1 (Strong Buy). The company is striving to implement several strategies to revitalize its top line. These include increased focus on advertising efficiency to boost new order sales and shifting sales to higher margin items, while also expanding the product line.

After several quarters of a drag in new order sales, we are impressed with PetMed’s improved performance last fiscal. The current year has demonstrated bullish momentum so far. PetMed is also working on improving the effectiveness of its campaigns. It has been quite successful in driving its sales via the Internet.

PetMed offers a wide range of products for dogs, cats and horses. We believe with the improvement in economic conditions, PetMed’s wide range of products will help drive growth in the coming quarters.

 

 

However, with an aim to increase the recognition of its brand names, PetMed markets its products through national advertising campaigns. Under this procedure, the company has been incurring huge expenses related to advertising campaigns in recent times. Hence, escalating advertising expenses exert pressure on the bottom line. Also, a tough competitive landscape is a major concern.

Stock Performance & Estimate Revision

Over the last year, PetMed has outperformed its industry. The company has gained 123.9% compared with 65.9% of the industry.

Also, the estimate revision trend for the current year is favorable with one estimate moving north over the last two months, compared with no movement in the opposite direction. Earnings estimates moved up 6.7% to $1.76.

Other Key Picks

Other top-ranked stocks in the broader medical sector are PerkinElmer , Bio-Rad Laboratories (BIO - Free Report) and Becton, Dickinson and Company (BDX - Free Report) .

Bio-Rad Laboratories has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The company has a long-term expected earnings growth rate of 25%.

PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.

Becton, Dickinson and Company is a Zacks #2 Ranked player. The company has a long-term expected earnings growth rate of 13.3%.

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