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Chewy Laps Up Post-Earnings Boost From Analysts

Chewy soars after its fourth-quarter earnings beat and analysts' upgrades.
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Analysts were lining up Wednesday to raise their price targets on Chewy  (CHWY)  after the online pet-care provider posted a surprise fourth-quarter profit.

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Shares of the Dania Beach, Fla., company were surging 11.23% to $89.41 in premarket trading.

The company reported better-than-expected earnings of $21 million, or 5 cents a share. Chewy said revenue nearly doubled amid surging online orders to $2.04 billion, beating Wall Street's expectations. 

"CHWY’s 4Q results and outlook amplified its industry-leading position and path to commanding market share gains still to come," said Wedbush analyst Seth Basham, who raised his price target to $100 from $90, while keeping his outperform rating. 

J.P. Morgan analyst Doug Anmuth raised his price target to $98 from $97 and declared that "Chewy is the largest pure-play online pet retailer in the U.S."

"We believe pet is a growing and highly attractive category that is early in the shift online (~30% penetration in 2020), and in our view Chewy is well positioned as the leader in online pet with a ~50% market share," said Anmuth, who has an overweight rating on the stock.

Barclays analyst Ross Sandler raised his price target to $93 from $80, while keeping his equal weight rating on the company.

"CHWY has delivered a string of strong quarters amid the Covid-19 pandemic, and the company is clearly winning the online channel, capturing more than 50% share of online pet spend growth...and the overall secular themes supporting the pet category remain intact," Sandler said.

Lauren Schenk, an analyst with Morgan Stanley, raised her price target to $83 from $76, saying Chewy "looks poised to deliver another solid year of top-line growth, with 4Q, 1Q, and '21 guidance all slightly ahead of expectations."

"While we view management's guidance as conservative given the 8.4% flow through rate delivered in 2020 (ex. tax reserve benefit and COVID costs)," said Schenk, who kept her equal weight rating, "we still would like to see flow through improve to at least ~10% to get more constructive on the earnings power of the business long-term in order to justify valuation."