01:30 PM EDT, 03/27/2025 (MT Newswires) -- Petco Health & Wellness' (WOOF) better-than-expected core profit results and guidance signal "solid" progress on its turnaround efforts, Wedbush Securities said Thursday.

The pet store chain late Wednesday reported fiscal fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization of $96.1 million, topping Wall Street's view for $91.5 million. The company expects adjusted EBITDA of $82 million to $83 million for the first quarter and $375 million to $390 million for the year, with each range ahead of the Street's views.

The results show "solid" progress under Chief Executive Joel Anderson to return the company's business model to retail operating efficiencies and reduce structural costs, Wedbush analysts Seth Basham and Matthew McCartney said in a note to clients. "Anderson has a strong leadership team in place to accelerate the restoration of retail fundamentals and pivot to growth in late 2025."

Anderson assumed the CEO role in July 2024.

Shares of the company surged 30% in Thursday afternoon trade.

Petco logged a fourth-quarter net loss of $0.05 a share, narrowing from $0.08 a year earlier, while sales decreased to $1.55 billion from $1.67 billion. Both metrics fell short of market estimates. Comparable sales grew 0.5%, lagging the 0.8% growth rate modeled by the Street.

Petco expects sales to be down by low single digits for the ongoing three-month period and for fiscal 2025.

The company has enough liquidity to execute its turnaround strategy, Basham and McCartney wrote. Cost reduction measures such as closing unprofitable stores show that the aim to boost EBITDA this year is high, according to the note.

"While there is more work ahead, I am confident our new leadership team is well-positioned to build on this early momentum, deliver double-digit adjusted EBITDA improvement in 2025 and set the business up for sustainable profitable growth," Anderson said in the Wednesday earnings release.

Wedbush maintained its outperform rating on the Petco stock, while lowering its price target to $4 from $6. "We look positively on the improving profitability and decision to focus on profitable growth," Basham and McCartney said.

Price: 3.14, Change: +0.70, Percent Change: +28.69