Chewy Poised for 'Significant' Earnings Growth, BofA Says in Upgrade

MT Newswires Live11-20 23:41

Chewy (CHWY) is expected to see "significant" earnings growth amid improving industry trends and expense discipline, BofA Securities said Wednesday.

BofA expects the industry to return to consistent growth of low-single-digit to mid-single-digit percentage amid easier comps in H1 2025 and comments from its recent pet expert call.

The online pet store's web traffic has accelerated "significantly" and is supportive of share gains and potentially better-than-projected customer count, BofA said.

"Improving industry data should lead to accelerating topline trends and stronger earnings leverage for Chewy, which we think the Street is likely underestimating," BofA analyst Curtis Nagle said. "Combined with a shift to higher gross margin sales, we think there is an opportunity for significant earnings growth in the coming years."

BofA raised its 2024 net revenue outlook for Chewy to $11.86 billion from $11.78 billion. It also upgraded the stock to buy from underperform and raised its price objective to $40 from $24.

The shares were up about 3.3% in recent trading.

Price: 34.04, Change: +1.10, Percent Change: +3.34

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