Chewy’s Strong Growth Prospects and Strategic Initiatives Justify Buy Rating Despite EBITDA Concerns

Morgan Stanley analyst Nathan Feather has maintained their bullish stance on CHWY stock, giving a Buy rating yesterday.

Nathan Feather has given his Buy rating due to a combination of factors that highlight Chewy’s strong performance and potential for growth. The company has demonstrated consistent revenue growth, with a 9% year-over-year increase, marking the fourth consecutive quarter of acceleration. This momentum has led Chewy to raise its fiscal year 2025 revenue guidance, suggesting continued strength in the high single-digit percentage range.
Despite some concerns regarding EBITDA performance, which fell below expectations for the third consecutive quarter, Nathan Feather attributes this to timing issues with expenses rather than any fundamental problems. He sees the current market conditions as a compelling entry point for investors, with the potential for Chewy to achieve double-digit revenue growth as the pet market improves. The focus on initiatives such as Chewy+, clinics, and fresh offerings further supports the positive outlook for the company.

In another report released yesterday, J.P. Morgan also reiterated a Buy rating on the stock with a $45.00 price target.

Based on the recent corporate insider activity of 53 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CHWY in relation to earlier this year.