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Investing.com - William Blair has reiterated an Outperform rating on Chewy Inc. (NYSE:CHWY) following the company’s second-quarter earnings report that showed modest upside to sales, gross margin, and adjusted EBITDA. According to InvestingPro data, Chewy maintains strong fundamentals with $12.1 billion in revenue and a healthy gross margin of 29.2%.
The pet products e-commerce company added 150,000 active customers sequentially, exceeding sell-side consensus expectations that had projected essentially flat sequential growth, though William Blair noted this figure fell short of some buy-side expectations of approximately 175,000 new customers. The company’s strong execution is reflected in its impressive return on assets of 12.4% and earnings per share of $0.91.
Chewy set its third-quarter sales and earnings guidance modestly ahead of expectations and increased its full-year sales guidance while maintaining its adjusted EBITDA margin guidance intact, which William Blair indicated has become an area of concern for direct-to-consumer business models. InvestingPro analysis suggests the stock is currently undervalued, with 13 additional exclusive insights available to subscribers, including detailed valuation metrics and growth indicators.
Despite the market’s reaction, William Blair characterized Chewy’s performance as having "handily beat expectations" with another quarter showing significant active customer growth and a return to healthy gross margin expansion.
The firm also noted that Chewy is moving beyond some near-term investments in automation, product development, and customer experience, from which the company anticipates more significant revenue and earnings contributions in the future.
In other recent news, Chewy Inc . reported its Q2 2025 earnings, demonstrating steady growth in both revenue and earnings per share (EPS). The company posted an EPS of $0.33, aligning with analyst expectations. Revenue slightly surpassed predictions, reaching $3.1 billion. These results reflect Chewy’s ability to meet market forecasts, despite challenging market conditions. The earnings report highlighted the company’s consistent performance in the pet e-commerce sector. Additionally, analysts have maintained their outlook on Chewy, focusing on its future guidance. These developments are part of Chewy’s ongoing efforts to navigate a competitive market landscape. Investors are closely watching how the company adapts to these conditions moving forward.
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