Bullish indicating open at $55-$60, IPO prices at $37
On Thursday, JPMorgan analysts reiterated their Overweight rating and maintained a $36.00 price target on Chewy Inc . stock (NYSE: NYSE:CHWY), which is currently trading near its 52-week high of $48.12. The analysts expressed optimism about Chewy’s product improvements and execution ahead of the company’s first-quarter fiscal 2025 earnings report, scheduled for Wednesday, June 11. They highlighted stable industry trends and projected growth in active customer numbers and net sales. The stock has shown remarkable momentum, delivering a 109% return over the past year. According to InvestingPro analysis, the company currently trades at a premium valuation with a P/E ratio of 51.4x.
The analysts expect Chewy to add 104,000 active customers quarter-over-quarter in the first quarter and 421,000 year-over-year for fiscal year 2025. Data from SimilarWeb (NYSE:SMWB) indicated a 4% year-over-year increase in website visits for the first quarter, with improvements noted in May. Bloomberg data suggested accelerating trends into the second quarter. This growth trajectory aligns with Chewy’s strong financial health, earning a "GREAT" overall score from InvestingPro’s comprehensive analysis system.
Chewy’s first-quarter net sales growth is projected at 6% year-over-year, with a 3% increase for the full fiscal year 2025. The analysts believe there is potential for upside. They anticipate that factors such as sponsored ads, product mix, automation, and scale benefits will drive profitability, projecting an adjusted EBITDA margin of 5.4% for fiscal year 2025 and free cash flow of $524 million.
Chewy has approximately $407 million remaining in repurchase authorization. The analysts believe Chewy could increase its fiscal year 2025 guidance for net sales and adjusted EBITDA margins. They noted Chewy’s defensive position against macroeconomic volatility, with a significant portion of sales in non-discretionary goods and a strong base of subscription-based customers.
In other recent news, Chewy Inc. is preparing for its upcoming quarterly earnings report, with analysts setting varied expectations. BofA Securities has increased its price target for Chewy shares to $49, anticipating first-quarter revenue of $3.09 billion, slightly above the consensus estimate. However, the expected EBITDA is $182 million, which is lower than the Street’s forecast. UBS has adjusted its price target for Chewy to $46, maintaining a Neutral rating and highlighting the importance of Chewy’s performance in sustaining its growth trajectory. Meanwhile, Jefferies downgraded Chewy from Buy to Hold due to valuation concerns, despite raising the price target to $43.
Chewy’s CFO, David Reeder, is set to depart after the next earnings announcement to take a CEO role in the semiconductor industry, and the company is actively searching for his successor. Additionally, Chewy has expanded its board by appointing Dr. Nat Goldhaber as a new independent director, enhancing its governance strategy. This decision aligns with Chewy’s focus on strengthening its leadership team and corporate governance. These developments reflect Chewy’s strategic movements in leadership and market positioning, with analysts closely watching the company’s financial performance and future growth potential.
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