Chewy Inc. (CHWY) PT Cut to $60 as Wolfe Research Sees a Stagnant Share Price Ahead

Wolfe Research analyst Deepak Mathivanan lowered the price target on Chewy Inc. (NYSE: CHWY) to $60.00 (from $65.00) after the company reported 4Q revenues and EBITDA below expectations, due to impacts from out of stock products (2-pt drag on revs) and GM headwinds. The company guided FY22 revenue growth of 16% at mid-point, which also came in below expectations due to a ~$250m drag from stockouts. CHWY is also seeing volatility in customer retention behavior post-pandemic that is weighing on FY22 customer growth.

The analyst reiterated a Outperform rating, stating "The company’s fundamentals (growth & profitability) are pressured by several headwinds including supply chain disruption, volatility in customer retention, elevated shipping costs, etc, which are likely to persist into 1H22. However, we believe many of these headwinds are temporary and expect to see relief in 2H22 and beyond. We don’t expect shares to rerate much higher until some of near-term headwinds abate but at 1.7x FY22 revenues AMC, shares are trading at a discount to IPO valuation despite meaningful progress achieved by CHWY operationally over the last three years."

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