Chewy’s Growth to Keep Coming as Pets Win Our Hearts

By Christiana Sciaudone

Investing.com —  Chewy (NYSE:CHWY) hit a record after reporting a loss that wasn’t as bad as expected.

Shares rose more than 3% to about $82 as the company said it lost 8 cents a share versus the expected loss of 13 cents. Sales of $1.78 billion were better than the estimated $1.72 billion.

Chewy also provided guidance of up to $1.96 billion for the fiscal fourth quarter, which would be a 45% increase from a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization margin for the year is forecast at between 0.2% and 0.4%.

Analysts from UBS, Needham and RBC Capital raised their price targets on the stock.

The online pet retailer saw revenue rise 45% from a year earlier, with a total of 17.8 million customers, up 40% from the 2019 equivalent quarter.

The stock has risen more than 180% in 2020, after going public in June 2019 at an IPO price of $22.

Needham’s Rick Patel maintained a buy rating on the company and raised the price target to $90 from $75. 

“The company is hitting on all cylinders and should remain a compelling growth story on the other side of Covid,” Patel wrote in a note, according to StreetInsider. “Its positive momentum continued into 4Q, resulting in bullish guidance that we view as achievable.”

The expansion into pet health care should help the company in 2021, Patel said.

Morgan Stanley (NYSE:MS)’s Lauren Schenk maintained its neutral-equivalent rating, and bumped the price target to $77 from $49.

 “While many other eCommerce businesses will likely experience significant deceleration in ’21 growth, or even declines, CHWY does not face exceptionally hard ‘one-time’compares,” Schenk said.