Shares of Chewy (CHWY) fell sharply in premarket trading Wednesday as the online pet retailer's first-quarter profit came in below analysts' expectations.
Chewy stock fell early Wednesday despite the pet-focused e-commerce firm reporting fiscal Q1 results ahead of estimates.
I rate Chewy, Inc. a Buy with a $60 fair value, due to strong topline growth and margin expansion potential in the expanding pet market. Chewy benefits from rising online pet product sales, robust customer acquisition, and increased spending per active customer, especially via its Autoship program. Strategic expansion into private brands and pet vet services, plus a debt-free balance sheet, supports long-term growth and margin improvement.
CHWY eyes Q1 y/y revenue and earnings growth as Autoship, ads and vet services fuel its diversified pet care strategy.
Chewy (NYSE:CHWY) has been downgraded to ‘Hold' from ‘Buy' by analysts at Jefferies due to valuation concerns after a run-up in the pet retailer's stock. Chewy shares have surged by 41% in the year-to-date, now trading at 24 times projected 2026 earnings before interest, taxes, depreciation and amortization (EBITDA), roughly one standard deviation above historical averages.
Chewy Inc (NYSE:CHWY) stock is down 2.8% in pre-market trading after Jefferies downgraded the pet e-commerce stock to “hold” from “buy,” despite raising its price target to $43 from $41.
Chewy (NYSE:CHWY) is expected to release its earnings around June 11. Chewy offers food and supplies for a range of pets and is also involved in emerging pet industry sectors such as personalized products, pet insurance, and pet telehealth, with a market capitalization of $19 billion.
In the most recent trading session, Chewy (CHWY) closed at $47.62, indicating a +0.34% shift from the previous trading day.
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Chewy's brand and recurring revenue model are impressive, with strong customer loyalty and expansion into Canada and new services like vet clinics and pharmacies. Despite stellar revenue growth and customer engagement, profitability is weak, with razor-thin net margins and excessive stock-based compensation eating up most of the profits. Operational inefficiencies, lack of cost discipline, and high valuation multiples make the stock unattractive until management demonstrates a commitment to financial health.
Chewy (CHWY) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.
Chewy (CHWY) concluded the recent trading session at $44.12, signifying a +1.87% move from its prior day's close.