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Needham maintained its Hold rating on Chewy Inc . (NYSE:CHWY) Tuesday following the pet retailer’s first-quarter results. The stock fell significantly Monday despite the company’s solid performance, with InvestingPro data showing a 14.2% decline over the past week. The company currently trades at a P/E ratio of 50.2x, reflecting high market expectations.
The research firm suggested the share price decline was primarily driven by elevated investor expectations, as the stock had reached post-COVID highs before the earnings announcement. Despite the recent pullback, InvestingPro data reveals an impressive 81.8% return over the past year, with revenue reaching $11.9 billion in the last twelve months. Needham made only minor adjustments to its estimates for the company.
Needham indicated that Chewy’s second-half guidance likely contains "some conservativism" given the strong performance expected through the second quarter and what it described as "the overall supportive environment for the company." According to InvestingPro, analysts expect EPS to grow to $1.28 in the next fiscal year, with 14 additional exclusive ProTips available for subscribers.
The firm acknowledged that Chewy "continues to show it is among the best positioned" in Needham’s e-commerce coverage universe and is expected to grow high single digits in the first half of 2025.
Despite these positive factors, Needham cited valuation concerns and "the uncertain durability of that growth" as key reasons for maintaining its Hold rating on the pet e-commerce company.
In other recent news, Chewy Inc. has been the focus of several analyst updates following its latest earnings report. Chewy’s first-quarter results for fiscal 2025 have led to multiple firms raising their price targets for the company. Guggenheim increased its target to $45, highlighting strong customer growth and improved operating metrics. JPMorgan raised its target to $47, citing continued execution and profitability improvements, and noted that Chewy’s revenue guidance might be conservative. Morgan Stanley (NYSE:MS) set its target at $50, pointing to robust customer growth despite reduced marketing spending. Jefferies raised its target to $44, emphasizing Chewy’s strong start to the year and market share gains, though it maintained a Hold rating due to valuation concerns. Goldman Sachs increased its target to $48, acknowledging strong sales growth and Chewy’s strategic initiatives, such as the expansion of its Vet Care clinics. These developments reflect confidence in Chewy’s potential for market share expansion and revenue growth through fiscal 2025.
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