How Chewy's Smart Moves Could Capture Over $1 Billion In Revenue

As the pet care industry experiences a significant upswing fueled by rising pet adoption rates and an aging pet population, companies like Chewy Inc. CHWY are emerging as key players poised to redefine market dynamics.

Chewy is well-positioned to capitalize on the imminent growth of the Pet Care market, according to BofA Securities.

The Chewy Analyst: Analyst Curtis Nagle maintained a Buy rating and price target of $49.

The Chewy Thesis: The Pet Care market, valued at $40 billion, is poised to grow due to improving adoption trends and the aging of pets adopted during COVID, Nagle said in the note.

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The Chewy Vet Care (CVC) rollout is progressing well, and management indicated that new customer acquisition has been better than expected, the analyst stated. CVCs are still in the early days, and more capital investments could accelerate their opening, or they may be expanded through M&A, he added.

"Based on our estimates for CVC locations to ramp and customer penetration to increase for Pharmacy, we see potential for $1bn+ in revenue that we believe the Street underappreciates," Nagle further wrote.

CHWY Price Action: Chewy shares were up 1.88% at $38.52 at the time of publication Tuesday, according to Benzinga Pro.

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