On Thursday, Chewy Inc . (NYSE:CHWY) saw its share price target lowered by Jefferies to $25.00 from the previous $27.00. Despite the reduction, the firm maintained its Buy rating on the company's stock. The adjustment comes amid observations that Chewy's profitability, while seemingly on the rise, is expected to be driven largely by an increase in non-cash items rather than operational improvements.
Jefferies expressed concerns regarding the pet retailer's growth trajectory, noting that it continues to be hampered by industry-wide spending pressures and ongoing investments. The firm emphasized the need for Chewy to demonstrate more substantial underlying profit potential.
The analyst's statement highlighted the disconnect between Chewy's expected margin progression for the fiscal year 2024 and the operational aspect of the business. The anticipated improvement in margins is attributed to non-operational factors, which could be seen as a negative signal for investors looking for tangible operational efficiencies.
Despite the price target cut, the Buy rating suggests that Jefferies still sees potential value in Chewy's shares. The firm's stance indicates a belief that, while immediate profitability may not be fully derived from operational advancements, the company's stock is still worth holding onto for investors.
Chewy, known for its online pet products and services, has been navigating a challenging economic environment where consumer spending patterns have been unpredictable. The lowered price target reflects the firm's adjusted expectations for the company's financial performance in the near term.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.