Goldman Sachs cuts Chewy price target to $40, maintains Buy rating

On Thursday, Goldman Sachs adjusted its outlook on Chewy Inc . (NYSE:CHWY), a $13.8 billion market cap company, by reducing the price target to $40 from the previous $45 while sustaining a Buy rating on the stock. The revision follows Chewy’s recent earnings report, which revealed a robust performance in the fourth quarter. Currently trading at $33.25, the stock has analyst targets ranging from $31 to $47, with a consensus recommendation leaning towards Buy. The company’s revenue exceeded guidance, and adjusted EBITDA margins were stronger than anticipated, thanks in part to a significant increase in net customer additions.

Chewy’s management emphasized several key themes during the earnings call, including the continued momentum into 2025 and the success of strategic initiatives contributing to growth and margin expansion. With annual revenue of $11.4 billion and a healthy gross profit margin of 29.2%, these initiatives range from the rising popularity of the Autoship program to sponsored ads and Chewy’s extensive healthcare offerings. According to InvestingPro data, the company has been profitable over the last twelve months, with analysts expecting continued net income growth this year. Additionally, management noted positive trends among recent customer cohorts despite ongoing debates about the broader consumer health in recent weeks.

The company also attributed its strong performance to internal initiatives such as the ramp-up of its mobile app, improved targeting, and site enhancements. Chewy’s leadership expressed confidence in the company’s ability to capitalize on a wide array of growth opportunities throughout 2025.

Goldman Sachs analysts remain optimistic about Chewy’s long-term prospects, citing the company’s potential to further digitize the pet care sector and expand strategic initiatives, especially in advertising. The firm has updated its forward operating estimates to reflect the insights from the earnings report and management’s commentary. With a P/E ratio of 36.5x and strong revenue growth, investors seeking deeper insights can access over a dozen additional ProTips and comprehensive analysis through InvestingPro’s detailed research report, one of 1,400+ available for top US stocks.

In other recent news, Chewy Inc. reported its fourth-quarter earnings for 2024, exceeding expectations with an earnings per share (EPS) of $0.28, compared to the forecasted $0.20. The company also reported revenue of $3.25 billion, surpassing the expected $3.2 billion, marking a 15% year-over-year increase. Evercore ISI maintained its positive stance on Chewy, keeping an Outperform rating and a $47.00 price target, highlighting improved profitability trends and a significant increase in active customers. Citi analysts raised Chewy’s stock price target to $42, maintaining a Buy rating, citing robust fourth-quarter earnings and a positive outlook for 2025.

Mizuho (NYSE:MFG) Securities also increased its price target on Chewy stock to $43, following strong fourth-quarter demand and margin performance. The firm noted that Chewy’s management has adopted a cautious strategy that might contribute to future financial beats. Jefferies reaffirmed its Buy rating on Chewy with a price target of $40.00, emphasizing the company’s ability to expand its customer base while enhancing profitability.

Chewy’s revenue for the full year reached $11.86 billion, up 6% from the previous year, with a record high free cash flow of $452.5 million. The company’s forward-looking guidance for 2025 includes net sales between $12.3 billion and $12.45 billion, representing growth of 6-7%. The company also plans to expand its Chewy Vet Care Clinics, underscoring its commitment to growing its services.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.