Shares of Chewy Inc
Chewy is a pure-play pet ecommerce company with several growth and margin levers at its disposal, according to Jefferies.
The Chewy Analyst: Kaumil Gajrawala initiated coverage of Chewy with a Buy rating and a price target of $27.
The Chewy Thesis: Pet health, advertisements, and automation are the near-term growth drivers for the company, Gajrawala said in the initiation note.
"For Chewy (14% share), we think active customer growth begins to track new pet ownership plus continued share gains; we estimate 21.3m active customers in F27 (+1.5% CAGR F24-F27)," the analyst wrote.
Chewy is a beneficiary of the rising average spend per household, which is more than 60% since 2019, "as owners opt for higher quality (priced) food, treats, and supplies," Gajrawala stated. He added that macro pressures may cause "pockets of weakness in the industry," but these are less likely to impact Chewy.
CHWY Price Action: Shares of Chewy had risen by 7.15% to $23.23 at the time of publication on Tuesday.
