Chewy's Loyalty Engine, $1B Pharmacy Business Have JPMorgan Staying Bullish Before Q1

JPMorgan analyst Doug Anmuth reiterated the Overweight rating on Chewy, Inc. CHWY, with a price target of $36.

The company will report fiscal first quarter 2025 financial results before the market opens on Wednesday, June 11.

According to Anmuth, investors are anticipating an upside to Chewy's Q1 net sales guidance of $3.06 billion–$3.09 billion and see the company raising its FY25 outlook for net sales of $12.30 billion–$12.45 billion and adjusted EBITDA margins of 5.4%–5.7%.

Anmuth maintains a bullish view on Chewy, citing its category leadership, rising profitability, and push to diversify revenue through high-margin segments like pharmacy (now at $1 billion TTM), international expansion, and Sponsored Ads.

Also Read: Options Corner: A Contrarian Case Builds As Traders Short Chewy Ahead Of Earnings

He notes Chewy is seen as a defensive name, with over 80% of sales coming from Autoship customers, which he sees as a major edge supporting revenue visibility and strong unit economics.

He forecasts net customer adds of 104K sequentially in the first quarter of FY25 and 421K year over year for the full year.

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SimilarWeb shows the company’s web traffic rose 4% year over year in the first quarter (down from 13% in the fourth quarter), with a pickup in May, while Bloomberg points to improving trends into the second quarter.

He estimates 6% year-over-year net sales growth for the first quarter and 3% for FY25—figures he considers may be conservative.

Anmuth sees profitability supported by ads, mix, automation, scale, and cost control, projecting a 5.4% adjusted EBITDA margin (+59bps year over year) and $524M in FCF (+16% year over year).

Price Action: CHWY shares are trading higher by 1.5% to $48.19 at last check Friday.

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