Chewy’s Strong Market Position and Growth Prospects Amid CFO Departure and Inflation Risks

William Blair analyst Dylan Carden has maintained their bullish stance on CHWY stock, giving a Buy rating on May 1.

Dylan Carden has given his Buy rating due to a combination of factors that highlight Chewy’s strong position in the market. Despite the unexpected departure of CFO David Reeder, Carden notes that Reeder’s exit is not expected to impact the company’s momentum, as he had been with Chewy for a relatively short period. The reaffirmation of Chewy’s first-quarter guidance underscores the company’s confidence in its long-term strategy and ongoing business strength.
Chewy’s recent growth in active customers over the past two quarters is seen as a positive indicator, with expectations for this trend to continue throughout the year. This growth is anticipated to drive revenue increases and improve margins, supported by factors such as sponsored ads, private label offerings, and expanding health and wellness services. Additionally, Chewy’s valuation, based on future cash flow estimates, appears attractive, with potential upside in cash flow anticipated over the coming years. However, Carden does acknowledge the risk of inflation, which could affect demand in higher-margin discretionary categories.

In another report released on May 1, TD Cowen also reiterated a Buy rating on the stock with a $43.00 price target.