2024-04-26 12:59:42 ET
Summary
- Chewy has underperformed the S&P 500 and Nasdaq 100 YTD, although revenue and earnings exceeded expectations in its Q4 FY23 earnings report.
- The management has warned of a slowdown in revenue growth in FY24 in the 4-6% range, while Adjusted EBITDA is expected to grow to 3.8%.
- Although Chewy is seeing NSPAC expansion with deeper penetration of its Autoship program, Active Customers are declining, which is concerning.
- Furthermore, investor sentiment is dampened, as it is uncertain whether the initiatives of Vet Care and international expansion into Canada will translate to higher wallet share.
Introduction & Investment Thesis
Chewy, Inc. (CHWY) is a pet e-commerce business that has severely underperformed the S&P 500 and Nasdaq 100 YTD. I initiated a "buy" rating on this stock in February, and my thesis was predicated on my belief that the company should see growth in high single digits over the coming years, given its success in driving higher wallet share as it scales its Autoship subscription program, while simultaneously innovating on strengthening its ecosystem by building solutions in its Chewy Health category....
Read the full article on Seeking Alpha
For further details see:
Chewy: Rating Downgrade To 'Hold' As Management Guides For Slower Revenue Growth In FY24