SoFi CEO enters prepaid forward contract on 1.5 million shares
On Wednesday, Mizuho (NYSE:MFG) Securities increased its price target on Chewy Inc . (NYSE:CHWY) stock, raising it slightly from $42.00 to $43.00, while maintaining an Outperform rating. The adjustment follows Chewy’s reported acceleration in demand during the fourth quarter, which exceeded expectations, and a strong margin performance. The company, currently valued at $13.7 billion, has demonstrated robust financial health with an overall "GOOD" rating according to InvestingPro metrics, supported by a solid gross profit margin of 29.2%.
The company’s forward-looking statements suggest a promising future, with the likelihood of surpassing projections and raising future guidance. Mizuho’s analysts note that Chewy’s management has adopted a cautious strategy that might contribute to future financial beats. This optimism is supported by InvestingPro data showing that four analysts have recently revised their earnings estimates upward, with the company expected to grow its net income this year. According to the follow-up discussions with Chewy’s CEO and CFO, several key points emerged. Firstly, Chewy’s current growth trajectory and internal execution are expected to push fiscal year 2025 revenue towards the upper end of the projected range, building on its current annual revenue of $11.4 billion.
Secondly, the guidance provided does not fully account for pet food inflation, which could potentially offer additional upside in the second half of the year. Thirdly, concerns regarding gross margins are believed to be overstated, as the fourth quarter faced a one-off issue and the company has several other initiatives that could positively impact margins. The company’s financial stability is evidenced by its ability to sufficiently cover interest payments, while operating with a moderate level of debt.
The analysts also highlighted investor concerns regarding a potential sale by BC Partners, which owns a 53% stake in Chewy, as a factor that may be temporarily restraining the stock’s performance. Nonetheless, Chewy’s fourth-quarter results are seen as a strong catalyst for the company, demonstrating the resilience and growth potential of its business model, which is less affected by tariffs.
Mizuho’s revised estimates and the new price target reflect confidence in Chewy’s ability to maintain its growth momentum and capitalize on its market position. The firm’s analysis suggests that Chewy’s strategic initiatives and market dynamics are aligning to support its continued success.
In other recent news, Chewy Inc. reported its fourth-quarter earnings for 2024, surpassing analysts’ 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, exceeding the expected $3.2 billion, marking a 15% year-over-year increase. Chewy’s full-year net sales reached $11.86 billion, up 6% from the previous year. Evercore ISI maintained an Outperform rating on Chewy, with a price target of $47.00, following the company’s strong earnings and improved profitability trends, including a notable increase in active customers. Jefferies also reaffirmed its positive stance on Chewy with a Buy rating and a steady price target of $40.00, highlighting the company’s ability to expand its customer base while enhancing profitability. Chewy’s recent financial achievements reflect a strategic focus on customer acquisition and margin improvement, with an adjusted EBITDA margin reaching 4.8%. Looking forward, Chewy has set a net sales guidance for 2025 between $12.3 billion and $12.45 billion, representing growth of 6-7%.
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