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Chewy Stock Pulls Back After Q1 Earnings: What Do Analysts Think?

Chewy Inc (NYSE: CHWY) shares traded lower by 5.4% Friday after the company reported better-than-expected first-quarter earnings and revenue on Thursday afternoon.

Chewy reported first-quarter EPS of 9 cents on revenue of $2.14 billion. Both numbers beat consensus analyst estimates of a 3-cent loss and $2.13 billion in revenue. Revenue was up 32% from a year ago.

Related Link: 5 Lululemon Analysts Break Down Q1 Beat: ‘Momentum Building At LULU’

Chewy reported 19.8 million active customers, up 32% year-over-year. Net sales per active customer were $388, up 8.7% from a year ago.

Chewy said first-quarter sales took a $40-million hit due to “elevated out-of-stock” levels. Management said it will continue to actively manage supply-driven industry headwinds, which it expects to abate in the second half of the year.

Looking ahead, Chewy guided for second-quarter revenue of between $2.15 billion and $2.17 billion, ahead of consensus estimates of $2.13 billion. Chewy also raised its full-year fiscal 2022 revenue guidance from a previous range of between $8.85 billion and $8.95 billion to a new range of between $8.9 billion and $9 billion.

Chewy’s Growth Drivers: Bank of America analyst Nat Schindler said hardgoods, private label products and health care drove Chewy’s earnings beat.

“We continue to see Chewy’s subscription-driven model and recession-resistant segment as appealing and sustainable heading into a post-pandemic world,” Schindler wrote.

Credit Suisse analyst Erin Wilson Wright said Chewy’s new vet offerings are noteworthy.

“CHWY’s Petscriptions offering is now present in 7,000 vet clinics (~23% US clinic penetration), and it recently launched Practice Hub, a new platform for vet practices at VMX last week,” Wright wrote.

Chewy Analysts On Valuation Upside: Raymond James analyst Nicholas Bacchus said profitability and topline growth numbers were highlights of Chewy’s quarter.

“While we remain positive on the story, we believe shares are fairly valued at ~13x FY21 EV/Gross Profit and believe that risk/reward is balanced at current levels,” Bacchus wrote.

Wells Fargo analyst Brian Fitzgerald said Chewy is innovating, building loyalty and improving engagement.

“We continue to believe CHWY’s wallet/market share gains will persist as newly acquired customers (42% of total customer base acquired within last two years) continue to move along their LTV timeline,” Fitzgerald wrote.

Chewy Ratings, Price Targets:

  • Credit Suisse has an Outperform rating and $121 target.
  • Raymond James has a Market Perform rating.
  • Wells Fargo has an Overweight rating and $120 target.
  • Bank of America has a Buy rating and $133 target.

Latest Ratings for CHWY

Date Firm Action From To
May 2021 Guggenheim Initiates Coverage On Buy
Apr 2021 CFRA Initiates Coverage On Hold
Apr 2021 Wolfe Research Initiates Coverage On Peer Perform

View More Analyst Ratings for CHWY

View the Latest Analyst Ratings

© 2021 Benzinga does not provide investment advice. All rights reserved.

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