Goldman Sachs: Petco Poised for 2026 Growth on High-Margin Vet Services

Goldman Sachs identified Petco (WOOF) as a company with notable upside into 2026, citing the strength and profitability of its veterinary services as a core growth driver. In a recent research note, the firm highlighted Petco’s expanding network of in-store and in-clinic veterinary offerings, which generate higher margins than commodity retail sales and create recurring revenue streams through preventative care and subscription programs.

Analysts at Goldman point to several structural advantages. Veterinary care is less price-sensitive than pet supplies and fosters frequent customer touchpoints, increasing lifetime value. Petco’s integrated approach—combining retail, wellness products and veterinary services—positions it to capture more share of wallet as pet owners prioritize health and preventive treatment for their animals. The services business also benefits from appointment-based scheduling and ongoing care plans, improving revenue visibility and utilization of clinic capacity.

Goldman Sachs expects margin expansion as services scale and fixed costs are absorbed, while cross-selling opportunities boost average transaction values. The advisory note noted that the company’s loyalty platform and subscription models further solidify recurring revenue, which can help smooth performance versus the more cyclical retail segment.

That said, Goldman’s outlook is tempered by competitive and execution risks. Competitors such as Chewy and PetSmart continue to invest in pet health, and execution on clinic expansion, talent recruitment for veterinary professionals, and efficient integration of services into existing retail footprints will be critical. Macroeconomic pressures on discretionary spending could also affect product sales, though services may be more resilient.

For investors, Goldman Sachs’ view frames Petco as a service-led retail opportunity: growth driven less by traditional product sales and more by high-margin, recurring healthcare services that can lift both revenue and profitability through 2026. Market watchers will be watching same-clinic sales, utilization rates, client retention, and progress on subscription penetration as near-term indicators of whether the thesis is taking hold.

Investors should weigh Goldman’s optimism alongside competitive dynamics and execution risk, but the emphasis on veterinary services underscores a strategic shift toward higher-margin, sticky revenue that could define Petco’s next phase of growth.