The analyst anticipates that Chewy will see a resurgence in year-over-year growth in net active customers, recovering from a period of stabilization after the initial pandemic-induced surge. Sundaram highlighted several strategies that could bolster Chewy’s gross and operating margins, including the expansion of private labels, entry into new business verticals such as health care, advertising, and insurance, and increased automation in distribution centers.
Furthermore, Chewy’s nascent but high-margin sponsored ads business is expected to experience significant growth as the company brings its technology stack in-house. Sundaram also pointed out Chewy’s strong financial position, marked by positive free cash flow, absence of long-term debt, and an ongoing share repurchase program. Free cash flow is projected to increase from $343 million in FY 24 to $428 million in FY 25 and further to $679 million in FY 26, enhancing the company’s financial stability and growth potential.
InvestingPro data confirms this strong financial position, revealing a moderate debt level with a total debt to capital ratio of just 3% and strong cash flows sufficient to cover interest payments. Subscribers can access 15 additional ProTips and comprehensive valuation metrics in the Pro Research Report.
InvestingPro data confirms this strong financial position, revealing a moderate debt level with a total debt to capital ratio of just 3% and strong cash flows sufficient to cover interest payments. Subscribers can access 15 additional ProTips and comprehensive valuation metrics in the Pro Research Report.
The analyst anticipates that Chewy will see a resurgence in year-over-year growth in net active customers, recovering from a period of stabilization after the initial pandemic-induced surge. Sundaram highlighted several strategies that could bolster Chewy’s gross and operating margins, including the expansion of private labels, entry into new business verticals such as health care, advertising, and insurance, and increased automation in distribution centers.Furthermore, Chewy’s nascent but high-margin sponsored ads business is expected to experience significant growth as the company brings its technology stack in-house.
Sundaram also pointed out Chewy’s strong financial position, marked by positive free cash flow, absence of long-term debt, and an ongoing share repurchase program. Free cash flow is projected to increase from $343 million in FY 24 to $428 million in FY 25 and further to $679 million in FY 26, enhancing the company’s financial stability and growth potential. InvestingPro data confirms this strong financial position, revealing a moderate debt level with a total debt to capital ratio of just 3% and strong cash flows sufficient to cover interest payments. Subscribers can access 15 additional ProTips and comprehensive valuation metrics in the Pro Research Report.
The analyst anticipates that Chewy will see a resurgence in year-over-year growth in net active customers, recovering from a period of stabilization after the initial pandemic-induced surge. Sundaram highlighted several strategies that could bolster Chewy’s gross and operating margins, including the expansion of private labels, entry into new business verticals such as health care, advertising, and insurance, and increased automation in distribution centers.
Furthermore, Chewy’s nascent but high-margin sponsored ads business is expected to experience significant growth as the company brings its technology stack in-house. Sundaram also pointed out Chewy’s strong financial position, marked by positive free cash flow, absence of long-term debt, and an ongoing share repurchase program. Free cash flow is projected to increase from $343 million in FY 24 to $428 million in FY 25 and further to $679 million in FY 26, enhancing the company’s financial stability and growth potential.
In other recent news, Chewy Inc (NYSE:CHWY). has seen a flurry of activity from analysts and shareholders alike. Mizuho (NYSE:MFG) Securities and Wolfe Research both upgraded Chewy’s stock to Outperform, with Mizuho raising its price target from $24 to $42, and Wolfe citing potential for revenue and margin growth. These upgrades are backed by Chewy’s robust financial health, highlighted by an annual revenue of $11.4 billion and healthy gross margins of 29.2%.
Chewy’s largest shareholder, Buddy Chester Sub LLC, initiated a public offering of $500 million worth of Chewy’s Class A common stock. In a simultaneous move, Chewy agreed to repurchase $50 million of its Class A common stock from the selling shareholder. RBC Capital and TD Cowen have maintained positive ratings on Chewy’s stock, citing favorable trends in the pet industry and strong third-quarter earnings.
Chewy’s third-quarter revenue was reported at $2.88 billion, slightly exceeding the consensus of $2.86 billion, largely due to a 9.9% year-over-year increase in Autoship customer sales. However, non-Autoship customer revenue declined by 13.4% year-over-year. RBC analysts have also named Chewy as one of their top stock picks in the U.S. Hardlines/Broadlines & Food Retail sector, recognizing the company’s market potential.
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