Is CHWY Stock a Buy After Earnings Plunge? 3 Analysts Weigh In on Chewy Prices.

Chewy (NYSE:CHWY) stock is tumbling 12% after the company, an e-commerce retailer specializing in pet products, reported a higher-than-expected fourth-quarter loss. Specifically, its loss per share, excluding certain items, came in at 11 cents, versus estimates of a loss of 9 cents. Its revenue rose 17% year over year to $2.39 billion, but also missed estimates. Moreover, the retailer’s net margin dropped 3.7 percentage points YOY, coming in at -2.7%.

The Chewy (CHWY) logo on a banner at the New York Stock Exchange.
Source: Chie Inoue / Shutterstock.com

In notes to investors today, a number of Wall Street analysts expressed reservations about the outlook of CHWY stock in the wake of Chewy’s Q4 results and 2022 guidance.

Is CHWY Stock a Buy Now?

Barclays stated that Chewy’s Q4 margins came in below the firm’s estimate, while the company’s guidance was “weak,” The Fly reported. The firm stated that it would not recommend buying the shares until there’s greater certainty about when Chewy’s user growth will accelerate and the “pressure” on its gross margins will ease. Barclays trimmed its price target on CHWY stock to $41 fro0m $43 and maintained its “equal weight” rating on the name.

Meanwhile, Morgan Stanley stated that, based on Chewy’s 2022 guidance, at the end of this year it will have increased its sales by $5.5 billion since 2019, while its EBITDA will have risen by only roughly $185 million. As a result, analysts are questioning whether the retailer’s EBITDA margins can surpass low-single-digit percentage levels going forward, the firm reported. It cut its price target on the shares to $62 from $68 and kept an “equal weight” rating.

Noting that Chewy’s fiscal 2022 revenue and EBITDA guidance were lower than analysts’ average outlook, Citi trimmed its target on the shares to $45 from $48. It kept a “neutral” rating on CHWY stock.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.


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