On Monday, Goldman Sachs reiterated its Buy rating on shares of Chewy Inc . (NYSE:CHWY) with a price target of $35.00. The firm's analysis highlighted that Chewy's recent uptick in active customer trends, as reflected in the Q2 results, is largely attributed to the company's own initiatives, such as reactivation strategies and its application.
These improvements are further bolstered by a general positive shift in industry conditions, although promotional activities have remained relatively subdued.
Chewy's long-term growth strategy is expected to drive its net sales growth at a faster rate, supported by a low single-digit percentage increase in the company's active customer base and continued expansion of its net sales per active customer (NSPAC).
According to Goldman Sachs, Chewy's strategic focus areas are poised to contribute to this growth trajectory, with particular emphasis on the health sector, which is anticipated to be a significant factor in NSPAC growth.
The pet retailer's Chewy Vet Care service is also scaling up, which aligns with the company's broader strategic initiatives. Additionally, Chewy is experiencing a rise in advertising revenue, which is contributing to the company's overall financial performance.
These elements are key components of Chewy's strategy to maintain and accelerate its growth in the competitive online pet products and services market.
Goldman Sachs' assessment underscores Chewy's commitment to leveraging both internal and external opportunities to enhance its market position. With the company's focus on customer reactivation, app engagement, health services, and advertising, Chewy is positioning itself to capitalize on the expanding demand in the pet care industry.
The reiterated Buy rating and $35.00 price target reflect the firm's confidence in Chewy's potential for sustained growth and profitability.
In other recent news, Chewy Inc. has been the focus of various analyst firms following its robust financial performance. Morgan Stanley maintained an Overweight rating on Chewy, highlighting the company's potential for margin growth and projecting a higher than consensus earnings before interest, taxes, depreciation, and amortization (EBITDA) of $750 million for the fiscal year 2025. Baird reiterated its Outperform rating and raised the stock's price target to $35, acknowledging the company's significant EBITDA that exceeded expectations by approximately 30%.
RBC Capital increased the price target for Chewy shares from $24.00 to $32.00, citing evidence of category stabilization and improved profit flow-through as positive indicators.
Mizuho Securities adjusted its price target for Chewy to $24, up from the previous target of $20, while retaining a Neutral rating on the stock. BofA Securities raised the price target to $24.00 from the previous $20.00 while maintaining an Underperform rating on the stock.
Chewy showcased a strong financial performance with earnings and revenue exceeding expectations. The company's EBITDA reached $145 million, surpassing Wall Street's forecast of $112 million. Chewy's second-quarter net sales increased by 3% to $2.86 billion.
The company's active customer base stood at 20 million, with the Net Sales Per Active Customer (NSPAC) climbing to $565. Chewy continues to expand its veterinary care services, opening two additional clinics in Colorado and Florida.
InvestingPro Insights
Chewy Inc. (NYSE:CHWY) has been a company of interest for investors, and recent data from InvestingPro supports a closer look at its financial standing. With a market capitalization of approximately $11.05 billion, Chewy's valuation reflects its significant presence in the online pet products and services market. The company's P/E ratio, standing at 31.3, suggests a premium that investors are willing to pay for its earnings potential, which is anticipated to increase as net income is expected to grow this year, according to InvestingPro Tips.
InvestingPro Data also shows a modest revenue growth of 4.36% over the last twelve months as of Q2 2025, indicating steady progress in the company's financial performance. Despite a high Price/Book multiple of 22.74, which may raise valuation concerns, Chewy holds more cash than debt on its balance sheet, suggesting a sound financial structure for pursuing its growth strategies. Moreover, the company's commitment to innovation and customer engagement is echoed by the 8 analysts who have revised their earnings upwards for the upcoming period, a positive sign for potential investors.
For those considering an investment in Chewy, there are 14 additional InvestingPro Tips available at https://www.investing.com/pro/CHWY. These tips provide deeper insights into the company's valuation metrics, stock performance, and financial health, which may be particularly useful for making informed investment decisions in the dynamic pet care industry.
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