Chewy Inc. (CHWY) First Public Report Looks Good, Fairly Valued - Raymond James

Raymond James analyst Aaron Kessler reiterated a Market Perform rating on Chewy Inc. (NYSE: CHWY) after the company reported 45% revenue growth (autoship +56%) and EBITDA margins expanding 530 bp y/y on improved product margin, supply chain efficiencies, advertising leverage, and other scale efficiencies. The company also raised 2020 revenue guidance modestly.

The analyst stated "Overall, we remain positive on Chewy fundamentals given: 1) large pet care market shifting online; 2) customer-centric approach including excellent customer service and wide product selection at competitive prices; 3) predictable customer economics and increasing sales per customer; 4) our expectation for ~20% long term revenue growth; and 5) our expectation for 5-10% long term EBITDA margin expansion (vs. -7% in 2018) driven by improved gross margins and scale efficiencies. While positive on fundamentals, we believe shares are fairly valued at 2.3x 2020 EV/Revenue and 10x 2020 EV/GP vs. peer group at 3.4x 2020 EV/Revenue and 6.4x 2020 EV/ GP and believe risk reward is more balanced at current levels."

For an analyst ratings summary and ratings history on Chewy Inc. click here. For more ratings news on Chewy Inc. click here.

Shares of Chewy Inc. closed at $33.72 yesterday.

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