Chewy the ‘next beast in e-commerce,’ claims Roth MKM

Chewy (CHWY) the ‘next beast in e-commerce,’ claims Roth MKM


By Sam Boughedda

Roth MKM initiated a Buy rating and $52 price target on Chewy (NYSE:CHWY) shares in a note on Friday.

Analysts said in a research memo that Chewy, the online pet products retailer, is “becoming the next beast in e-commerce.

“As we continue to navigate the consumer complex, the building strength of Chewy’s core business stands out, particularly around the limited demand “giveback” period faced by most other eCommerce players,” stated the analysts.

The firm’s positive rating on the stock is based on Chewy’s highly predictable revenue streams, ongoing secular opportunity within the growing $60 billion+ core pet food and consumables category, and self-funded growth.

“In our view, the most overlooked part of the CHWY investment thesis is its very narrow and highly predictable revenue trajectory, which allows for better profitability within its core $7-8B autoship business. This, in turn, allows for CHWY to further invest into higher margin adjacencies which should fuel the profitability mechanism, all while consolidating customer spend across the broader pet category,” they added.

“Net customer adds improved sequentially into Q3 following two-quarters of slight declines. We see an inflection and catalyst in the near-term, as active customer growth rebounds through 2023.”


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