Core Insights - Chewy Inc. has experienced a 6% increase in stock value over the past month, closing at $37.01, which is 5.3% below its 52-week high of $39.10 [1][7] - The stock is currently trading at a forward 12-month P/E multiple of 29.97X, above the industry average of 25.96X, raising questions about the potential for further upside [1][4] - The company is projected to achieve net sales between $11.79 billion and $11.81 billion for fiscal 2024, reflecting an approximate 6% year-over-year growth [10] Financial Performance - Chewy's Autoship program generated $2.3 billion in sales during the third quarter, accounting for 80% of net sales and showing an 8.7% year-over-year increase [11] - The active customer base grew by 160,000 in the third quarter, reaching 20.2 million, with net sales per active customer increasing by 4.2% year-over-year to $567 [14] - The adjusted EBITDA margin expanded to 4.8% in the third quarter, but guidance for the fourth quarter indicates a decline to 3.4% due to higher seasonal marketing costs [18] Market Position and Strategy - Chewy has entered the veterinary services market with Chewy Vet Care, targeting a $25 billion addressable market and operating six veterinary clinics [15] - The company's sponsored ads business is on track to meet its long-term target range of 1-3% of net sales by fiscal 2024, contributing to gross margin improvement [16] - Chewy's expansion into the Canadian market is showing positive results, with improvements in Autoship penetration and net sales growth [16] Challenges and Outlook - Analysts have revised earnings estimates downward, with the Zacks Consensus Estimate for fiscal 2024 now at $1.08 per share, down from previous estimates [21] - The company faces challenges such as slowing growth, potential customer acquisition saturation, and rising cost pressures in a price-sensitive market [17][19] - Elevated advertising and marketing expenses reached $191.8 million in the third quarter, which could strain profitability if revenue growth does not accelerate [20]

Shares of leading pet e-commerce behemoth Chewy (CHWY 5.58%) were up 5% as of 12:45 p.m. ET on Friday, according to data provided by S&P Global Market Intelligence.Following five separate price target increases from analysts in December, Chewy received its first upgrade of the new year from Wolfe Research, which named the stock one of its top picks for 2025.Does Chewy still have room to run?Despite Chewy's stock already doubling from its 2024 lows, Wolfe Research (and I) believe the best is yet to come. The ...

Core Viewpoint - Chewy Inc (NYSE:CHWY) has received an upgrade from Wolfe Research, moving from "peer perform" to "outperform," highlighting potential for revenue and margin growth along with a strong valuation [1] Group 1: Stock Performance - Over the last nine months, Chewy's stock has increased nearly 107%, with a year-over-year gain of 62.2% [2] - The stock is approaching its 12-month high of $39.10, reached on June 27, following a recovery from an early November bear gap [2] Group 2: Analyst Ratings - Despite positive price movements, 11 out of 27 analysts still rate Chewy stock as a "hold," indicating potential for further upgrades [3] - A short squeeze could provide additional upward momentum, as short interest represents 7.4% of the stock's available float, equating to over two days of buying power [3] Group 3: Options Market - Options trading appears to be an affordable strategy, with Chewy's Schaeffer's Volatility Index (SVI) at 46%, ranking in the 4th percentile of its annual range, suggesting lower-than-usual volatility expectations [4]

Ex-hedge fund analyst with a strong interest in finding winners and losers in industries where corporate strategy matters most. I focus on analysing the market structure, competitive positioning and strategic catalysts that lead to money-making ideas in varying time horizons. Enjoy reading the research!Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase ...

Core Insights - Chewy's stock has surged 47% over the past year, currently trading around $32, but has declined 73% from its February 2021 peak of approximately $120, and is below its June 2019 IPO price of $35 [1] - The company has seen a recent uptick in pet adoption rates and a steady increase in its customer base, contributing to positive sales growth [1][2] Financial Performance - Chewy projects Q4 sales to increase by approximately 13%, reaching between $3.12 billion and $3.18 billion, while revising its full-year sales guidance to a range of $11.84 billion to $11.88 billion, representing 6% growth [2] - The adjusted EBITDA margin guidance has been raised to 4.6% to 4.8%, exceeding the previous outlook of 4.5% to 4.7% [2] - In Q3, Chewy's revenue grew 5% year-over-year to $2.9 billion, driven by a 9% increase in Autoship sales, which reached $2.4 billion [3] - Net sales per active customer rose 4% year-over-year to $567, despite a decline of 100,000 active customers year-over-year, with an addition of 200,000 new active customers during the quarter [3] - Gross margin expanded by 80 basis points year-over-year to 29.3%, and adjusted earnings per share increased by 33% year-over-year to $0.20 [3] - Free cash flow grew three times year-over-year to $152 million, with the company ending the quarter with $507 million in cash and marketable securities and no debt [3] Market Comparison - Chewy's stock has underperformed the broader market over the last three years, with returns of -34% in 2021, -37% in 2022, and -36% in 2023 [4] - In contrast, the Trefis High Quality Portfolio has outperformed the S&P 500 each year during the same period, indicating less volatility and better returns [4] Business Model and Offerings - Chewy sells a variety of pet food and supplies, and is expanding into new categories such as personalized products, pet insurance, and telehealth services for pets [5]

Tractor Supply Company (TSCO) has announced the nationwide expansion of Stella & Chewy's product offerings at its Petsense by Tractor Supply stores yesterday. The expanded selection includes freeze-dried raw patties, meal mixers, kibble and raw-inspired nutrition solutions for dogs and cats, catering to the rising demand for premium, natural pet food.To celebrate the launch and encourage customers to engage in the product trial, the company offers a 20% discount on all Stella & Chewy’s freeze-dried raw dog ...

Core Viewpoint - Chewy Inc. (CHWY) has experienced a significant year-to-date stock increase of 36.5%, raising questions about its future growth potential and whether investors should take profits or hold [1]. Group 1: Stock Performance - Chewy's stock has underperformed compared to the industry, which has risen 42.3%, but has outperformed the Retail-Wholesale sector and the S&P 500 index, which gained 32.4% and 27.7% respectively [2]. - As of last Friday, Chewy's stock closed at $32.26, which is 17.5% below its 52-week high of $39.10 reached on June 27, 2024 [5]. Group 2: Business Growth Drivers - Chewy has established itself as a leader in the online pet retail industry, with a growing customer base and a recurring revenue model. The company anticipates fiscal 2024 net sales between $11.79 billion and $11.81 billion, indicating approximately 6% year-over-year growth [9]. - The Autoship program is a significant revenue driver, accounting for 80% of third-quarter fiscal 2024 net sales, with customer sales growing 8.7% to $2.3 billion [10]. - Chewy added 160,000 active customers in the third quarter, reaching a total of 20.2 million, with Net Sales Per Active Customer (NSPAC) growing 4.2% year-over-year to $567 [11]. - The company's expansion into veterinary services through Chewy Vet Care targets a $25 billion market, with six vet clinics operational and plans to meet its target of 4-8 clinics for fiscal 2024 [12]. - Chewy's Sponsored Ads business is expected to reach 1% to 3% of net sales by the end of 2024, enhancing profitability [13]. Group 3: Challenges and Risks - Potential challenges include slowing growth, customer acquisition saturation, and rising cost pressures, which could impact stock momentum [14]. - The adjusted EBITDA margin expanded to 4.8% in the third quarter, but fourth-quarter guidance suggests a decline to 3.4% due to increased seasonal marketing costs [15]. - Chewy operates in a price-sensitive market, facing competition from companies like Petco and Central Garden & Pet, which may affect pricing strategies and margins due to inflationary pressures [16]. - Advertising and marketing expenses reached $191.8 million, or 6.7% of sales, in the third quarter, with projections for the full year at the high end of the 6% to 7% range, potentially straining profitability if revenue growth does not accelerate [17]. Group 4: Earnings Estimates - The Zacks Consensus Estimate for earnings per share has seen downward revisions, with estimates lowered by 3 cents to 20 cents for the final quarter and by 7 cents to $1.08 for fiscal 2024 [18].

Group 1: Market Overview - The S&P 500 is expected to finish its second consecutive year with gains exceeding 20%, indicating that many popular stocks are trading near all-time highs [1] - There are investment opportunities available outside of the favored tech and AI sectors, with some stocks appearing unusually cheap by historical standards [2] Group 2: Retail Sector Performance - Retailers have experienced a mixed start to the holiday season, with cautious consumer spending patterns; while Walmart shows strong customer traffic, competitors like Target are struggling [3] - Lululemon Athletica reported a 9% sales increase for Q3, with management raising its full-year outlook and a gross profit margin improvement to 59% from 58% year-over-year [4] - Lululemon's net income for the quarter surpassed $1 billion, up from $881 million in the previous year [4] Group 3: Lululemon's Growth and Challenges - Lululemon's growth is primarily driven by its international segment, while the U.S. division saw a 2% decline in the last quarter; investors should monitor improvements in the U.S. and Canada [5] - Despite a recent rally, Lululemon's stock is down 20% in 2024 and is trading at 29 times earnings, about half the valuation seen in early 2024 [5] Group 4: Chewy's Market Position - Chewy's shares have outperformed the broader market in 2024 but remain significantly below pandemic highs, down over 40% in the past three years compared to a 30% increase in the S&P 500 [6][7] - The company has struggled to regain growth momentum, with a slight decline in its active customer base; however, over 80% of sales last quarter came from its subscription-like autoship service [7][8] - Chewy is entering attractive categories like pet health, and while fiscal 2025 may show modest improvements, long-term investors may benefit from adding this stock to their portfolio [8][9]

Group 1 - A firm affiliated with Chewy's largest shareholder is conducting a public offering of stock valued at $500 million [1][2] - The underwriters of the offering have a 30-day option to acquire an additional $75 million in stock [2] - Chewy will concurrently buy back $50 million worth of shares from the affiliated firm, which will be cancelled and retired after the purchase [3] Group 2 - The $50 million share buyback is separate from Chewy's existing $500 million share repurchase program initiated in May [3] - Chewy's stock initially declined but later increased, showing a nearly 40% rise in value this year [4] - The stock price has been influenced by social media activity and a brief investment by a notable meme stock investor [4]

I recently joined The REIT Forum and if you are looking for more investment ideas like this one, get them exclusively at The REIT Forum with access to our subscriber only portfolios.I last wrote on Chewy (NYSE: CHWY ) in October, where I had upgraded the stock from a "sell" to a "buy" as I believed its fundamentals were improving from rigorous cost management and targeted investments. However, I decided to remainAmrita runs a boutique family office fund in beautiful Vancouver, where she leads the investment ...