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On Monday, Citizens JMP made an adjustment to the price target for Chewy Inc . (NYSE:CHWY), decreasing it to $39 from the previous $40. Despite this change, the firm maintained its Market Outperform rating on the company’s shares. The stock has shown remarkable momentum, delivering a 96% return over the past year. According to InvestingPro analysis, the company currently trades near its Fair Value, with analysts setting price targets between $31 and $47. The revision comes with a perspective that pet-related personal consumption expenditures (PCE) will likely show resilience in the event of an economic downturn, drawing parallels to behaviors observed during the Global Financial Crisis (GFC).
The analyst from Citizens JMP highlighted the ongoing trends of humanization and premiumization in the pet industry as a basis for this resilience. Chewy’s business model, which includes a significant portion of autoship orders, along with its involvement in pet healthcare and consumables, is expected to contribute to sustained revenue growth. The company has demonstrated this with a 6.4% revenue growth in the last twelve months, generating nearly $12 billion in revenue. InvestingPro data shows the company maintains strong financial health with a "GOOD" overall score, particularly excelling in growth metrics.
Chewy’s focus on the pet market positions it to potentially benefit from the consistent expenditure on pets by their owners, even in less favorable economic conditions. The company’s autoship program, which allows for regular, scheduled deliveries of pet-related products, is seen as a key factor in driving steady sales figures.
The adjustment in price target by Citizens JMP reflects a cautious but optimistic view of Chewy’s financial prospects. The company’s reliance on recurring revenue streams through autoship orders and its presence in the essential categories of healthcare and consumables for pets are considered to be strong pillars supporting its market performance.
While the price target has been revised downward slightly, the Market Outperform rating indicates that Citizens JMP still holds a positive outlook on Chewy’s stock performance relative to the market. The firm’s analysis suggests that Chewy is well-positioned to navigate through economic challenges, backed by the enduring nature of pet-related spending. With a gross profit margin of 29.2% and positive earnings of $0.91 per share, the company has demonstrated its ability to generate profits. Discover more insights about Chewy’s performance with InvestingPro, which offers 13 additional ProTips and a comprehensive Pro Research Report covering all crucial aspects of the company’s operations.
In other recent news, Chewy Inc. has reported financial results that exceeded expectations for both revenue and EBITDA in the fourth quarter, as noted by TD Cowen. This positive performance was attributed to an increase in active customers and improved operating leverage, despite slower growth in gross margins. Chewy’s guidance for the first quarter also surpassed consensus projections, signaling a robust fiscal outlook for 2025. RBC Capital Markets has maintained an Outperform rating for Chewy, forecasting increased net customer additions and margin improvements. The firm adjusted its estimates for Chewy’s net sales growth and EBITDA margin, reflecting confidence in Chewy’s performance amid challenging economic conditions.
Piper Sandler has reiterated an Overweight rating on Chewy, highlighting the company’s strong position in the pet industry and optimistic pet growth projections. Meanwhile, CFRA adjusted its price target for Chewy to $42, maintaining a Strong Buy rating, citing Chewy’s solid financial footing and strategic initiatives in premium products and veterinary services. Chewy’s expansion into veterinary care, with plans to open more clinics, is noted as a significant development, with 52% of veterinarians aware of these efforts. These recent developments underscore Chewy’s strategic growth initiatives and financial resilience in a competitive market.
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