Sumit Singh knew just the right thing to say.
During the online pet-supply company’s first-quarter earnings call. Chewy’s (CHWY) chief executive probably got the toughest question of the day from his chief financial officer, David Brenner.
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“Sumit, any comments on dogs versus cats?” Brenner asked.
“We love them all equally,” Singh replied. “In previous calls, we’ve come into the year sort of seeing the proportion of cats or cats being a popular choice.”
“The data doesn’t refresh as often, but we’ve continued to see strengthening of the cat business, and at the same time the dog business as well, given that we drove 6% year-over-year growth in consumables, which accounted for roughly 50% of the growth overall for Chewy Inc. So happy with the performance.”
Nevertheless, investors weren’t happy with the Plantation, Fla., company’s results and they took a big bite out of Chewy’s stock, which at last check was down 12%.
Analyst changes Chewy’s rating
Mizuho analyst David Bellinger downgraded Chewy to neutral from outperform with a price target of $47, up from $43, according to The Fly.
The analyst said he remained constructive on the long-term trajectory of Chewy’s business model. But he said the current setup into and after the Q1 results is “increasingly less attractive.” The investment firm downgraded the shares and removed their status as a Top Pick.
Chewy shares are up 24% in 2025 and up nearly 82% from a year ago. The shares have run 55% off the April lows as Chewy’s customer and revenue growth trends have strengthened, Bellinger said.
However, the analyst said these factors are well-known at this point and fully embedded in expectations. Bellinger said he would not be putting new money to work at these levels.
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Meanwhile, Evercore ISI analyst Mark Mahaney raised the firm’s price target on Chewy to $52 from $47 and affirmed an outperform rating on the shares.
Mahaney said the higher price target comes in the week of what he called a beat-and-bracket Q1 report. Profitability trends remain positive as gross margins expand and profit margins based on earnings before interest, taxes depreciation and amortization widen.
Chewy saw a fourth consecutive quarter of positive net additions to active customers; that’s the such addition since fourth-quarter 2021, the analyst said, adding that Chewy remains one of the firm’s Top Small and Mid-Cap Longs.
Veteran trader: Chewy’s quarter was solid
TheStreetPro’s Stephen Guilfoyle also took a careful look at Chewy’s results, and he is buying the shares into the stock-price beatdown because “the quarter was solid.”
“The guidance was OK,” he said in his recent column. “Still, the shares moved sharply lower. I think this selloff may be either misguided, or simply algorithms overfeeding on early momentum. This is that story. Let us rock.”
Guilfoyle, whose career dates back to the floor of the New York Stock Exchange in the 1980s, said Chewy provided some guidance, not in the news release “but in the materials released for the earnings call for those who like to do their own homework.”
For the current quarter, he said, Chewy projected net sales of $3.06 billion to $3.09 billion, which would work out to growth of 7% to 8%.
“Wall Street was looking for about $3.03 billion, so this was a nice beat,” the veteran trader said. “The firm also projected adjusted [earnings per share] of $0.30 to $0.35. This brought the midpoint of the range above the $0.31 that Wall Street had in mind. Another beat.”
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For the full fiscal year, Chewy is projecting net sales of $12.3 billion to $12.45 billion.
“This is what I think the sellers or algorithms latched on to early on Wednesday morning,” Guilfoyle said. “Wall Street was looking for something close to $12.4, so this pulled the midpoint of the range just below that consensus view. A miss.”
Chewy is also projecting full-year adjusted Ebitda margin of 5.4% to 5.7%. he noted, and the company has “no debt load at all, which we really, really like.”
“[Wednesday] morning’s selloff is an overreaction to the full-year revenue guidance, which just barely disappointed,” Guilfoyle said.
“Cash flows are fine. Profitability is not a problem. The balance sheet is in very good shape. There is a lot more to like here than to be disappointed in.”
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