syy891013

Growing Demand for Pet Product and Services

Long
NASDAQ:ROVR   Rover Group, Inc.
ROVR LONG

Comments on Annual Quantitative Analysis
  • End 2023 Price Target using FY1 forecasted PE = $8.66
  • End 2023 Price Target using same Sales Multiple as 2022 = $6.27
  • Forecasted earnings to turn from negative to positive in FY23. Turnaround story.
  • Encouraging outlook for the remainder of the year and next.

Quantitative Analysis (Sector Comps)
  • Stock P/E on a premium to sector and is positive.
  • Stock earnings growth momentum is sequentially positive and above sector average.

Comments on Business
  • Return to pre-pandemic travel levels and in-office work a positive factor on growth.
  • World’s largest online marketplace for pet care and world’s leading pet services app.
  • Stronger bookings particularly for overnight boarding and house sitting services, during months of June, July, and August, and November and December, which in a typical year coincides with high travel demand related to summer and holiday travel, respectively.

KPI’s driving Revenue and Earnings
  • Adjusted EBITDA had continued to improve on an annual basis and was positive for the first time during fiscal 2021 and again during fiscal 2022.
  • Total Bookings increased 20% compared to Q2 2022. New bookings increased 7%, compared to Q2 2022. Repeat bookings increased 23%, compared to Q2 2022.
  • Has a clean balance sheet, with total current assets covering total liabilities.

Earnings Announcements
  • During Q2 2023 earnings, Management increasing both revenue and Adjusted EBITDA guidance for 2023.

Trade Structure
Could not find a good option trade. Decided to buy the stock directly. Looking to hold until November earnings. Hoping for positive net earnings and achieve break even to be catalyst to see rise in stock price.
Entry - $6.42
Target - $7.00
Stop - $5.89
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