Chewy’s Stock Price Pulls Back From Highs, As Earnings Cast Shadow

Chewy Inc. (NYSE: CHWY), a prominent player in the online pet retail market, is facing increased investor scrutiny as it prepares to release its fiscal first-quarter 2025 earnings report. Chewy's stock, which has significantly outperformed broader market indices with a gain of over 35% in recent months, is currently trading at $45.79 per share, a decrease of $0.72 (-1.55%) from the previous close, and roughly a 5% pullback from recent highs.

The market's reaction appears to be a blend of anticipation and apprehension. While Chewy has demonstrated resilience and consistent growth in a competitive landscape, several factors are contributing to the current market sentiment.

This morning's earnings report is a major focal point. Analysts are projecting earnings per share (EPS) of $0.34, an improvement on the $0.31 reported in the same quarter year-over-year. Consensus revenue estimates are for $3.08 billion, reflecting a sales growth of 7.05% year-over-year.

Adding to the uncertainty is the recent announcement of CFO David Reeder's departure. While Reeder's transition to a CEO role in the semiconductor industry is a testament to his capabilities, it inevitably introduces a period of adjustment for Chewy. His continued presence through the earnings report aims to mitigate any disruption, but the market is always wary of leadership changes, especially in key financial positions. The search for a successor and the potential impact on Chewy's financial strategy are elements that investors will be closely watching.

The average price target of $42.13, as set by analysts, remains below the current price action, indicating a potential overvaluation, while the wide range between the high target of $52 and the low of $31.80 highlights the divergence in analyst opinions regarding Chewy's future performance.

Despite the near-term headwinds, Chewy's fundamental strengths cannot be ignored. The company's consistent revenue growth, driven by increased spending from both new and existing customers, underscores the loyalty of its customer base.

The Autoship subscription program continues to be a significant revenue driver, providing a predictable and recurring income stream. Moreover, Chewy's expansion into the pet healthcare business presents a substantial growth opportunity. As pet ownership continues to rise, and pet owners increasingly prioritize the health and well-being of their animals, Chewy is well-positioned to capitalize on this trend.

Chewy's stock is trading down 1.94% in the pre-market, with an element of profit taking after the recent rally, and taking some risk off the table leading into earnings likely contributors.