CHWY - Chewy Q1 Earnings: A Purrfect Quarter With Possible Tailwinds Ahead

2024-05-30 12:02:47 ET

Summary

• Chewy reported strong Q1 earnings showcasing record gross margin, NSPAC, adjusted EBITDA, and Autoship sales as a percentage of total revenue.
• The pet industry appears to be on track to rebound this year with pet adoption rates surpassing pet relinquishment for the first time since 2022.
• Chewy opened 4 Vet Care clinics in Q1 and plans to bring total clinics near 8 by the end of 2024.
• I’m reiterating my buy rating and raising my price target for Chewy to $94 by 2030, representing 337% upside from current levels.
• I recommend waiting for a pullback below $20 to enter a long position in Chewy.

Last month, I initiated my coverage on Chewy, Inc. ( CHWY ) with a buy rating due to the forecasted growth in US pet spending, the company’s recurring business model, and its potential to gain market share thanks to the opening of Vet Care clinics. Since then, Chewy climbed nearly 36% on the back of strong Q1 earnings and a $500 million share buyback program....

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