These Analysts Revise Their Forecasts On Chewy Following Q1 Results

Chewy Inc. reported Q1 adjusted earnings of $0.35 per share and sales of $3.12 billion, exceeding consensus estimates of $0.34 and $3.08 billion, respectively. While Q2 and FY25 sales guidance aligned with or slightly exceeded expectations, the FY25 revenue outlook of $12.30 billion-$12.45 billion fell short of the $12.54 billion Wall Street estimate. Following the earnings release, several analysts adjusted their price targets, with most raising their targets while maintaining positive ratings, contributing to a 2.5% increase in Chewy's share price.

Analysis

Chewy Inc. reported a strong first quarter, with adjusted earnings of 35 cents per share, marking a 12.9% year-over-year increase and surpassing both the 34-cent consensus and management's 30-35 cent guidance. Sales also exceeded expectations, growing 8.3% year-over-year to $3.12 billion, compared to a $3.08 billion consensus and guidance of $3.06 billion-$3.09 billion. For the second quarter of fiscal 2025, Chewy projects sales between $3.06 billion and $3.09 billion, ahead of the $3.03 billion consensus, and adjusted earnings of 30-35 cents per share, bracketing the 31-cent consensus. However, the company's full-year fiscal 2025 sales forecast of $12.30 billion to $12.45 billion is slightly below Wall Street's estimate of $12.54 billion. A key positive is the anticipated fiscal 2025 adjusted EBITDA margin improvement to 5.4%-5.7%, up from 4.8% in fiscal 2024. Following the announcement, Chewy shares increased 2.5% to $41.79, supported by multiple analyst price target upgrades from firms such as JP Morgan (to $47), Wedbush (to $45), Evercore ISI (to $52), Citigroup (to $49), and Guggenheim (to $45), despite Mizuho lowering its target to $44 while maintaining a Neutral rating.

Key Decisions for Investors

• Investors should weigh Chewy's robust Q1 earnings and sales beat, alongside positive Q2 guidance, against the slightly softer-than-expected full-year 2025 sales forecast.
• The projected significant improvement in fiscal 2025 adjusted EBITDA margin to 5.4%-5.7% is a critical factor, indicating enhanced profitability that could mitigate concerns over moderated top-line growth expectations.
• Given the predominantly bullish analyst sentiment and upward price target revisions following the earnings, continued monitoring of sales execution and margin expansion in subsequent quarters is warranted.