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Investing.com - Citizens JMP has assumed coverage on Chewy Inc . (NYSE:CHWY) with a Market Outperform rating and raised the price target to $48.00 from $39.00. The new target aligns with the broader analyst consensus, as InvestingPro data shows analyst targets ranging from $32.31 to $52.00, with 10 analysts recently revising their earnings estimates upward.
The firm cited the quality of Chewy’s core business, noting that the autoship feature creates revenue visibility for the online pet retailer.
Citizens JMP believes Chewy’s advertising segment has room to grow, while also pointing to potential expansion in health and pharmacy sales where the company remains underpenetrated.
The analyst report highlighted accelerating customer growth combined with opportunities to increase net sales per active customer, leading Citizens JMP to conclude that consensus estimates for Chewy are too low.
The firm expects Chewy’s EBITDA growth to "materially outpace revenue growth," which it believes justifies a premium multiple for a company with approximately 10% top-line growth.
In other recent news, Chewy Inc. has been in the spotlight with a series of significant developments. The company announced a $1 billion public offering of its Class A common stock by its largest shareholder, Buddy Chester Sub LLC, affiliated with BC Partners. Chewy itself will not receive proceeds from the sale but plans to repurchase and retire $100 million worth of its own stock. This move was approved by a special committee of independent directors and does not affect Chewy’s existing $500 million share repurchase program.
On the financial front, UBS maintained a Neutral rating on Chewy, citing strong sales momentum but expressing concerns about profitability. UBS adjusted its future earnings estimates downward, reflecting a cautious outlook. Meanwhile, Needham reiterated its Hold rating, pointing to valuation concerns despite Chewy’s promising position in the e-commerce market. Guggenheim took a more optimistic stance, raising its price target to $45 and maintaining a Buy rating, driven by strong customer growth and expectations for margin improvements. These recent developments underscore the varied perspectives among analysts regarding Chewy’s financial trajectory and market position.
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