We recently compiled a list of the 10 Best Pet Stocks To Invest In According to Analysts. In this article, we are going to take a look at where Patterson Companies Inc. (NASDAQ:PDCO) stands against the other pet stocks.
Pet Industry at a Glance
The pet industry is a rapidly growing sector. It was valued at approximately $320 billion in 2023 and is projected to reach nearly $500 billion by 2030, according to Bloomberg Intelligence’s Pet Economy Report. This growth is driven by a rising global pet population and an increasing trend of pet humanization, where owners treat pets as family members and are willing to spend more on their care, including premium food and health services.
The report notes that the US is positioned to remain the largest pet market. In the United States, the market is expected to approach $200 billion by 2030, with significant spending on veterinary care and pet healthcare products.
Ann-Hunter Van Kirk, Bloomberg Intelligence Senior Biopharmaceutical Analyst and co-author of the report, noted that improved pet nutrition is contributing to longer lifespans for pets, which in turn drives up spending on healthcare for aging animals. Analysts expect this trend of increased spending on pet health to continue over the next decade.
Diana Rosero-Pena, Bloomberg Intelligence Consumer Staples Analyst and co-author of the report, highlighted a notable rise in consumer spending on pet products, predicting that the pet food market could grow by more than 50% by 2030.
Shopping Trends Among Pet Owners
In April 2024, Acosta Group released the results of a new study highlighting important insights into pet parents’ shopping habits. With two in three US households owning at least one dog or cat, spending on pet food, treats, and healthcare has become a significant part of household budgets. The study found that 96% of pet parents consider their pets family members, and 86% are willing to adjust their budgets to accommodate their pets’ needs. This presents a valuable opportunity for retailers and brands to target this large audience.
The study also highlighted key preferences among pet parents regarding food choices. 42% prioritize high-protein content for their pets, followed closely by 40% who focus on joint care and 38% who seek probiotics for gut health. Additionally, 36% of pet parents are interested in fresh, minimally processed foods. Brand loyalty plays a significant role in purchasing decisions, with 57% of dog owners and 59% of cat owners sticking to brands they have previously purchased. However, impulse buying is common, especially among millennials, with 58% influenced by in-store promotions. Most pet owners are turning to mass retailers, pet specialty stores, and online retailers for their pet care purchases, indicating a shift in how pet care products are accessed.
Overall, the pet industry remains a vital part of the global economy, driven by strong consumer attachment to pets and an ongoing commitment to their well-being.
Our Methodology
To compile our list of the 10 best pet stocks to invest in according to analysts, we reviewed our own rankings and consulted various online resources. From an initial pool of more than 20 pet stocks, we focused on the top pet stocks that analysts believe have the most potential for growth. We ranked the 10 best pet stocks to buy based on their average price target upside potential according to analysts as of October 29, 2024.
Additionally, we mentioned the hedge fund sentiment surrounding each stock, which was taken from Insider Monkey’s database of 912 elite hedge funds as of Q2 of 2024.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A pharmacy counter stocked with diverse pet medications.
Patterson Companies Inc. (NASDAQ:PDCO)
Average Price Target Upside Potential According to Analysts: 23.11%
Number of Hedge Fund Holders: 25
Patterson Companies Inc. (NASDAQ:PDCO) is an oral and animal health company that ranks 8th on our list of the best pet stocks to invest in according to analysts. The company is primarily focused on providing products, technologies, services, and business solutions to the animal and oral health markets in North America and the United Kingdom.
In the first quarter of fiscal 2025, Patterson Companies Inc. (NASDAQ:PDCO) reported net sales of $1.54 billion, a decline of 2.2% year-over-year. The animal health segment generated $982.4 million in sales, with internal sales down 2.8% compared to the same quarter in the previous year. This decline was influenced by a tough economic environment, including inflation and rising interest rates, as well as lower sales in the companion animal business. However, Patterson Companies Inc. (NASDAQ:PDCO) is shifting its strategy to prioritize more profitable areas within this segment.
The company faced significant setbacks due to a cybersecurity attack on Change Healthcare, which disrupted the company’s dental segment. This incident affected the ability of dental customers to submit insurance claims, leading to reduced orders for consumables. Despite these challenges, Patterson Companies Inc. (NASDAQ:PDCO) remains committed to innovation and has integrated advanced AI pathology detection features into its Eaglesoft dental practice management software to improve diagnostic accuracy and streamline workflows for dental practices.
Patterson Companies Inc. (NASDAQ:PDCO) is taking proactive steps to enhance efficiency and drive growth. The company is implementing cost management measures while continuing to invest in long-term growth initiatives.
Despite recent performance issues, Patterson Companies Inc. (NASDAQ:PDCO) returned $73.3 million to shareholders in the first quarter of fiscal 2025 through dividends and share repurchases.
According to Insider Monkey’s database, 25 hedge funds held stakes in Patterson Companies Inc. (NASDAQ:PDCO) in the second quarter of 2024. Additionally, the median 1-year stock price target for PDCO set by analysts indicates a potential upside of 23% from its current price.
Overall, PDCO ranks 8th on our list of the best pet stocks to invest in according to analysts. While we acknowledge the potential of PDCO as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PDCO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
