CS First Boston Cuts Petsmart to 'Neutral'

Analyst Gary Baltar also downgraded Bed, Bath, Beyond due to valuation

CS First Boston downgraded Petsmart (PETM ) and Bed, Bath & Beyond (BBBY ) to neutral from outperform.

Analyst Gary Baltar says he is downgrading due to the stocks' having recently reached their respective $20 and $37 targets. He says Petsmart recently has been trading at its highest valuation in more than four years, at a premium to most other retailers. He notes Bed & Bath has recently been fully nine multiple points more expensive than the next-highest priced retail stock he covers. With uncertainty the major theme of the fourth quarter, Baltar says he would look to stocks whose prices reflect less aggressive spending expectations: Best Buy, Dollar General and Lowe's.

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