Citi ups Chewy target, sees buying opportunity after selloff

Citi analyst Steven Zaccone raised the firm’s price target on Chewy (CHWY) to $49 from $42 and keeps a Buy rating on the shares. The post-earnings weakness in Chewy shares present an attractive buying opportunity, the analyst tells investors in a research note. The firm says that despite a headline Q1 sales and EBITDA beat, the slight gross margin miss, higher than expected spending, and lack of a guidance raise were the reasons for the stock pullback. “That’s all in the rear-view mirror now,” contends Citi. The firm believes Chewy’s fundamental growth and margin expansion story “is well intact,” with the sales outlook improving based on strong active customer growth. The company remains a market share gainer in the “resilient “pet category, and industry demand normalization should be an incremental growth driver, contends Citi.