Pets at Home Group PLC a “dead cert income fund holding”, says Peel Hunt

() has been labelled “a dead cert income fund holding” by analysts at Peel Hunt, who said that the retailer was seeing sales “re-emerging” as it began to reopen its stores following the UK’s lockdown.

In a note on Tuesday, the broker reiterated its ‘buy’ rating and 300p target price on the FTSE 250 group and said sales of pets were “picking up again” after a hard closure during lockdown, as well as almost all of the company’s ‘Groom Rooms’ also having reopened.

READ: Pets at Home warns on profits as sales dwindle after early lockdown spike

“These services will bring more footfall to the stores and whilst we would be surprised if weekly sales had returned to the norm for June, our assumption of -25% [like-for-like sales for the first half] might be a little on the conservative side, as might our -10% for [the second half]”, Peel Hunt said, adding that with pet ownership on the rise the fundamentals “look good”.

The broker also highlighted that visitor numbers for the company’s website were “very strong through late May and June so far” and that the company’s vet business had also won market share during lockdown as it continued to operate with remote consultations as competitors were forced to close due to social distancing measures.

“We would describe our assumptions as sensible rather than gung ho here, but it could definitely be argued that we are not using much upside imagination”, the broker said, however, they added that if their forecasts were correct, the company’s management would have “a long discussion about cash distribution when things are calmer” and envisaged special dividends ahead.

“Maybe the best way to look at [Pets at Home] is as a dead cert income fund holding, and a structurally very sound core holding for a growth fund. In other words, it’s just one to own”, the concluded.

Pets at Home shares were 0.5% lower at 241.8p in lunchtime trading on Tuesday.