Analysts Boosts Chewy's Price Forecast But Say Valuation Is Bit Stretched

Author: Vandana Singh | August 29, 2024 01:29pm

On Wednesday, Chewy Inc. (NYSE:CHWY) reported better-than-expected second-quarter 2024 results and reaffirmed annual guidance.

The company reported sales of $2.86 billion, up 2.6% year over year, almost in line with the consensus of $2.86 billion and the management guidance of $2.84 billion—$2.86 billion.

The retailer of pet supplies reported adjusted EPS of $0.24 compared to the consensus of $0.02 and $0.15 a year ago.

JP Morgan analyst writes, “We’re encouraged that Chewy’s Active Customers returned to growth for the first time since 1QFY23, building on potential industry greenshoots seen at 1QFY.”

Though Chewy maintained its fiscal year 2024 sales guidance, JP Morgan notes that some investors expected a modest raise. The analyst is encouraged by improving Active Customer trends, meaningful Adjusted EBITDA upside, and significant capital returns.

RBC Capital Markets writes, “visibility back to +high-single-digits net sales growth remains low.”

The analyst maintains the Outperform rating and raises the price target from $24 to $32 based on ~20x revised FY 2025 adjusted EBITDA estimate ($670 million).

“Though admit that valuation is beginning to feel a bit stretched…but, bulls will latch on to continued evidence of category stabilization, improved profit flow-through and share repurchase activity. Bears will push back on valuation,” RBC Analyst writes.

Price Action: CHWY stock is up 1.71% at $29.21 at the last check on Thursday.

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Posted In: CHWY