Chewy Price Targets Lifted by RBC Capital and Needham

RBC Capital analyst Mark Mahaney lifts his price target on Chewy to $113 from $85.
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Chewy  (CHWY) - Get Report shares rose sharply Thursday after two analysts raised their price targets for the online pet supplies retailer amid optimism about its fundamentals.

RBC Capital analyst Mark Mahaney lifted his target to $113 from $85, keeping his outperform rating. That new target puts him at the top of analyst forecasts, according to Bloomberg.

Mahaney noted in a report that management views the boost Chewy has received from the Covid pandemic as “more structural than transitory.” Chewy’s private label and prescriptions business continue to grow, driving up gross margins, he said.

Chewy recently traded at $99.44, up 5.65%, and has soared 243% year to date. Stuck-at-home consumers have turned to pets as solace during the pandemic.

Meanwhile, Needham analyst Rick Patel boosted his price target to $110 from $90, keeping his buy rating. He named the stock as his “top pick” for next year.

Increased digital shopping should help increase net sales per customer, he said. The pet product segment “is poised to continue growing through 2024,” Patel said.

Online penetration for pet products is low compared to other categories, which should give Chewy plenty of room to grow, he said. Profit margins should increase Patel, said. Chewy has created a "durable and scalable" platform.

Chewy reported that its net loss narrowed on a 45% increase in revenue for the quarter ended Nov. 1. Both figures beat analyst expectations. Revenue rose to $1.78 billion from $1.23 billion last year. Chewy’s loss in the latest quarter was 8 cents a share, narrowing from 20 cents in the year-earlier quarter.