William Blair analyst Dylan Carden has maintained their bullish stance on CHWY stock, giving a Buy rating today.
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Dylan Carden has given his Buy rating due to a combination of factors that suggest strong future growth potential for Chewy. The analysis projects a clear trajectory towards 30.5 million active customers and $18.5 billion in sales by 2030, with an expected compound annual growth rate of 8% over the next five years. This growth is supported by the assumption of stable margin expansion, leading to over $1.5 billion in adjusted EBITDA and an 18% earnings growth.
Carden believes that the current market estimates are overly conservative, particularly regarding customer growth. While the market expects minimal growth in active customers, Carden anticipates a structural increase of 2 to 3 million customers annually post-2025. He argues that the market underestimates the potential for online migration in the pet industry, which could significantly exceed 50% penetration. Additionally, Chewy’s advertising revenue and margin improvements, driven by a new first-party platform and stable marketing costs, present further upside potential.
In another report released today, Barclays also maintained a Buy rating on the stock with a $50.00 price target.