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On Wednesday, Raymond (NSE:RYMD) James reaffirmed its Market Perform rating on Chewy Inc . (NYSE: NYSE:CHWY) following the company’s fourth-quarter earnings report. Chewy’s financial results exceeded Wall Street’s expectations in terms of revenue and EBITDA margin, but its gross margin percentage expansion fell short of projections. The company, currently trading at a P/E ratio of 35.8x, reported a robust gross profit margin of 29.2% and generated $11.4 billion in revenue over the last twelve months. According to the analyst, Chewy benefited from higher demand due to improved market conditions for pet household formation, effectively capitalizing on this trend. InvestingPro analysis shows the company maintains strong financial health with an overall score of "GOOD," supported by 13 key investment factors available to subscribers.
The company’s forward-looking guidance for the first quarter of fiscal year 2025 (F1Q25) is slightly higher than consensus estimates for revenue, while earnings per share (EPS) are projected to meet expectations. Chewy’s full-year fiscal 2025 (FY25) guidance anticipates revenue and EBITDA margin to be in line with current market predictions. Supporting this outlook, InvestingPro data reveals that four analysts have recently revised their earnings estimates upward, with EPS forecast at $1.35 for FY2025. The analyst noted a potential slowdown in revenue growth post-F1Q25, with an expected increase of 4-5% compared to the 6-7% growth projected for F1Q25.
The analyst highlighted that the FY25 forecast does not account for an extra week in the financial calendar, which could represent approximately a 2% reduction in growth for FY25. This adjustment is due to the fiscal year lapping a 53rd week, a factor that is expected to influence the year-over-year growth comparison.
Chewy’s fourth-quarter performance, marked by a beat on both top and bottom lines, indicates the company’s strong execution in a favorable market environment. The guidance provided by Chewy for the upcoming quarters reflects cautious optimism, with projections that are generally consistent with market expectations, albeit with a note of conservatism considering the anticipated impact of the extra week in the previous fiscal year.
In other recent news, Chewy Inc. has been the focus of several analyst reports as it approaches its fourth-quarter earnings announcement. TD Cowen raised Chewy’s price target to $45, maintaining a Buy rating, and anticipates fourth-quarter revenues of approximately $3.20 billion, marking a 13% year-over-year growth. The firm expects an improvement in gross margin to 29.3% and a significant increase in EBITDA, projecting $118 million, a 36.9% rise from the previous year. Meanwhile, Piper Sandler reiterated an Overweight rating with a $40 target, highlighting stable pricing and an uptick in Chewy’s active customer base, marking the first projected growth in eight quarters.
JMP analysts maintained a Market Outperform rating with a $37 price target, emphasizing Chewy’s durable industry trends and ongoing initiatives such as veterinary clinics and Canadian market expansion. Raymond James confirmed a Market Perform rating, expecting fourth-quarter revenue growth of around 13%, driven by increased active customers and net sales per active customer. They forecast a 5% revenue increase for fiscal year 2025, with gross margin expansion due to a higher mix of healthcare revenue.
Seaport Global initiated coverage with a Neutral rating, acknowledging Chewy’s strong market position but noting challenges such as stable U.S. pet market growth and potential impacts from declining consumer confidence. The firm’s valuation suggests Chewy’s stock is fairly priced, considering its opportunities and industry challenges. These developments provide a comprehensive snapshot of Chewy’s current position and outlook in the evolving pet industry landscape.
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