Chewy Inc recently held its Investor Day, where they discussed their future plans. The company expects their sales growth for FY24 to be below their long-term target of a high single-digit percentage. However, they are confident in achieving a long-term adjusted EBITDA margin of 10% and anticipate margin accretion in FY24, regardless of the macro environment.
Analyst Anna Andreeva from Needham notes that Chewy has focused on only half of the Health TAM, which includes $4 billion in insurance and $18 billion in products. She believes that as more customers shift their pharmacy purchases online, Chewy will benefit across the board. In fact, over 20% of Chewy’s active customers have already purchased from their pharmacy.
Needham reiterates their Buy rating on Chewy with a price target of $25, an increase from $20. They believe that as the pet industry continues to move towards online platforms, Chewy is well-positioned for growth. However, they do acknowledge that Amazon remains a strong competitor in the market.
One of Chewy’s key features, Autoship, makes up 75% of their sales and helps cultivate a highly loyal customer base. These customers spend over $1,000 annually. Additionally, with the inclusion of clinics, Chewy can now tap into an NSPAC opportunity worth up to $1,700, allowing them to address a larger portion of the $500-$600 pet health spend.
In terms of stock performance, CHWY shares are currently up 4.63% at $21.13.
Overall, Chewy is optimistic about their future prospects and is actively working towards expanding their market share in the pet industry.