Chewy Inc (CHWY: NYE), the online pet retailer, has seen its stock price decline in 2023. However, analysts believe the company is well-positioned for a rebound this year.
Chewy Stock: Why Analysts Are Positive About It
Below are the key points that show the optimism of analysts.
- Resilient Customer Base: Pet care spending tends to be recession-proof. Even in economic downturns, pet owners prioritize their furry companions’ needs. Chewy’s strong customer loyalty and recurring revenue model suggest continued demand for its products.
- Focus on Efficiency: Management’s recent shift towards cautious spending indicates a focus on profitability. This could improve Chewy’s financial health in the long run.
- Undervalued Stock: Chewy’s current price-to-sales ratio is significantly lower than its peak earlier this year. This could be an attractive entry point for investors looking for a long-term play.
- Growth Potential: The pet care industry is expected to continue growing. Chewy’s strong brand recognition and e-commerce dominance position it to capitalize on this trend.
Stock Target Advisor’s Analysis on Chewy:
Stock Target Advisor rates CHWY as a ‘Hold’ with a target price of $24.93, suggesting a potential price change of 38.57% in 12 months. Currently, 12 market analysts provided coverage on CHWY, with the consensus opinion leaning towards a ‘Buy’. The approximate target prices range from $16 to $40, an indication of the potential opportunities that lie ahead for the company.
There are several positive signals supporting our analysis. The company has been generating positive cash flow and free cash flow over the past four quarters—a healthy sign for any business. However, it’s important not to overlook the challenges. CHWY exhibits a high volatility and has shown poor risk-adjusted returns. Compared to book value and earnings.
The Bottom Line:
Chewy’s focus on customer satisfaction, efficient operations, and a large addressable market make it a compelling recovery candidate in 2024.
