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On Wednesday, Jefferies reaffirmed its positive stance on Chewy Inc . (NYSE:CHWY), a $13.75 billion market cap online pet retailer, with a Buy rating and a steady price target of $40.00. According to InvestingPro data, the company trades at a P/E ratio of 35.2x and has generated revenues of $11.44 billion in the last twelve months. The endorsement follows a strong finish to fiscal year 2024, where Chewy achieved and surpassed key performance indicators. Notably, the company reported a quarterly increase of 1.8% in active customer growth and a year-over-year improvement of 75 basis points in its Adjusted EBITDA margin, reaching 3.8%.
The analysts at Jefferies anticipate these trends to persist into fiscal year 2025. They predict that the company’s guidance for mid-single-digit percentage sales growth, coupled with another 75 basis-point expansion in margins (at the mid-point), indicates robust market share gains. This optimism is reflected in InvestingPro data, which shows four analysts recently revising their earnings estimates upward, with the company maintaining a healthy gross profit margin of 29.19%. This is particularly significant given the return to normalized growth rates within the industry.
According to Jefferies, Chewy’s ability to expand its customer base while enhancing profitability demonstrates a well-managed balance that should continue to drive the company’s stock performance. The firm’s analysis suggests that the online pet retailer is well-positioned to maintain its upward trajectory in the coming fiscal year.
Chewy’s recent financial achievements and forward-looking guidance reflect the company’s strategic focus on customer acquisition and margin improvement. Jefferies’ reiteration of its Buy rating underscores confidence in Chewy’s ability to capitalize on these strengths and to navigate the competitive landscape effectively.
Investors and market watchers will likely keep a close eye on Chewy’s performance as it embarks on fiscal year 2025, seeking to validate Jefferies’ positive outlook and the company’s potential for sustained growth and profitability. For deeper insights into Chewy’s valuation and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company’s financial health, valuation metrics, and growth potential among 1,400+ top US stocks.
In other recent news, Chewy Inc. reported its fourth-quarter earnings for 2024, surpassing analysts’ expectations with an earnings per share of $0.28, compared to the forecasted $0.20. The company also reported revenue of $3.25 billion, exceeding the expected $3.2 billion, marking a 15% year-over-year increase. For the full year, Chewy achieved net sales of $11.86 billion, representing a 6% increase from the previous year. The company has set a net sales guidance for 2025 between $12.3 billion and $12.45 billion, indicating growth of 6-7%. Chewy plans to open 8-10 new vet clinics in 2025, highlighting its commitment to expanding services. The company returned $943 million to shareholders in fiscal 2024 and plans further expansions in its Chewy Vet Care Clinics. Analysts from firms such as Mizuho (NYSE:MFG) and JPMorgan engaged with Chewy during the earnings call, discussing the company’s strategies and future growth prospects.
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