Chewy (NYSE:CHWY) reported better-than-expected fourth-quarter results. However, CHWY stock declined 2.5% in Wednesday’s extended trading session. The drop stems from the company’s lower-than-expected Q1 revenue forecast. Additionally, the company expects its 2024 active customer base to stay flat due to inflationary pressures and subdued pet ownership trends. This irked investors.
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Chewy operates an online platform for pet food, supplies, medications, and other pet health products and services.
Q4 Earnings Highlight
The company reported EPS of $0.07, exceeding analysts’ expectations of a loss of $0.04. Its adjusted EPS stood at $0.18 per share, up from the prior-year quarter’s EPS of $0.16. Moreover, it surpassed analysts’ estimates by $0.09.
Chewy’s revenue increased 4.2% year over year to $2.83 billion, surpassing the consensus estimates of $2.79 billion. The year-over-year growth was driven by solid demand for Chewy’s health and non-discretionary consumable products. During the quarter, net sales per active customer (NSPAC) increased by 11.9% to $555.
Q1 and Fiscal 2024 Outlook
CHWY expects its Q1 revenue to be between $2.84 billion and $2.86 billion, up about 2% year over year. However, it fell short of analysts’ expectations of $2.89 billion.
Furthermore, the company projects Fiscal 2024 revenue between $11.6 billion and $11.8 billion, compared with the Street’s estimates of $11.7 billion. The guidance reflects 4% to 6% growth year-over-year.
Analyst Remains Optimistic
Following the release of Q4 results, Goldman Sachs analyst Alexandra Steiger reiterated a Buy rating on Chewy stock but lowered the price target to $32 (80.4% upside potential) from $36.
The analyst is bullish about CHWY’s long-term prospects and expects it to benefit from international expansion, ad revenue opportunities, and strong momentum in the Chewy Health unit.
Is Chewy a Buy, Sell, or Hold?
Chewy has a Moderate Buy consensus rating based on six Buy, one Hold, and one Sell ratings. The analysts’ average price target on CHWY stock of $25.63 implies a 44.48% upside potential. Shares of the company have declined by about 29% in the past three months.
