Broker tips: Pets At Home, AG Barr
By Iain Gilbert
Date: Tuesday 30 Sep 2025
(Sharecast News) - Analysts at Berenberg lowered their target price on 'hold' rated Pets At Home from 245p to 220p on Tuesday, stating the group's rebuild "will take time".
Berenberg said its new, lower forecasts for Pets at Home now factor in the group's latest profit warning, announced on 18 September, resetting its FY26 group adjusted pre-tax profit expectation at £90m, the bottom end of the latest £90m-100m guidance range.
The German bank highlighted that this means that, in total, it has cut its FY26 forecast by roughly 30% so far this year, driven by "a more subdued" pet care retail market than anticipated and cost headwinds. It also noted that this flows through to its outer-year forecasts.
"Any significant improvement in market conditions aside, we think sustained positive momentum in the share price from here will require regaining investors' confidence following three profit warnings, which hinges on a return to group earnings growth driven by a turnaround of the group's retail division," said Berenberg.
"Our new, lower DCF-based price target of 220p reflects our reduced forecasts. At this stage, we do not see material short-term catalysts, although the group's balance sheet strength continues to enable a strong dividend and 6.5% yield, providing share price support. We hold our dividend flat in FY 2026E, growing thereafter, but we remove any future share buybacks from our forecasts until they have been announced."
Shares in AG Barr were weaker on Tuesday due to a lack of upgrades despite a strong first-half report from the Scottish soft drink and energy drink manufacturer, though Peel Hunt still kept its positive view on the stock.
The Irn-Bru maker posted a 3.3% increase in revenue and 20.1% jump in adjusted profits underpinned by a solid performance from the soft drinks business. Meanwhile, the adjusted EBIT margin improved to 15% from 13% last year, helped by manufacturing efficiencies and cost discipline. However, expected increases to marketing spend in the second half were expected to offset the progress made to the bottom line.
"Given the strength of the first half an upgrade might have been expected, but the increased marketing spend in 2H is set to hold this back," Peel Hunt said. "Management flagged that the market is seeing that promotional activity has intensified, in the grocery multiple channel in particular, and consumer confidence remains subdued. However, it remains confident in guidance and the long-term opportunity."
Peel Hunt, which kept a 750p target price on the stock, highlighted the stock's valuation, trading at 16 times next year's earnings and at an EV/EBITDA multiple of 8.6x.
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