Chewy (CHWY) Shares Down 32% Despite Rising Profitability
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Source: NASDAQ.COM
- Profitability Improvement: Chewy's net income and free cash flow have turned positive over the past few years, indicating a steady enhancement in profitability against a backdrop of fivefold sales growth, which is expected to further drive stock price recovery.
- Customer Base Expansion: The number of active customers has increased from 10.6 million in 2019 to 21.2 million today, demonstrating Chewy's growing appeal in the pet goods e-commerce market, with future potential for higher market share.
- Sales Growth Slowdown: Although the recent quarter's sales growth was 8%, down from a 20% annualized rate over the past five years, Chewy is focusing on optimizing high-margin product lines, which is expected to enhance profitability and drive future stock performance.
- Investment Opportunity Emerges: With Chewy's stock down 32% from its 52-week high despite solid earnings, it presents a potential buying opportunity for investors, particularly for young investors who love pets, making Chewy an ideal investment choice.
Analyst Views on CHWY
Wall Street analysts forecast CHWY stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for CHWY is 47.06 USD with a low forecast of 42.00 USD and a high forecast of 52.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
20 Analyst Rating
17 Buy
3 Hold
0 Sell
Strong Buy
Current: 31.430
Low
42.00
Averages
47.06
High
52.00
Current: 31.430
Low
42.00
Averages
47.06
High
52.00
About CHWY
Chewy, Inc. is an e-commerce business geared toward pet products and services. The Company’s products consist of pet food and treats, pet supplies and pet medications, other pet-health products, and pet services. It serves its customers through its retail websites, and its mobile applications and focuses on delivering customer service, competitive prices, convenience, including Chewy’s Autoship subscription program, and a range of pet food, treats and supplies, and pet healthcare products and services. It partners with approximately 3,200 of the brands in the pet industry, and it creates and offers its own private brands. It owns a number of trademark registrations and applications in the United States and in foreign jurisdictions. These trademarks include American Journey, Blue Box Event, Careplus, Chewy, Chewy.com, Chewy Vet Care, Dr. Lyon’s, Frisco, Goody Box, Onguard, PetMD, PracticeHub, Tiny Tiger, True Acre Farms, Tylee’s, Vibeful, and The Zoo.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
