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.

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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.