Stock in Chewy (NYSE: CHWY) has lagged behind the market as a whole in the past year, despite the fact that the company's growth has been steady. Needham analysts anticipate a buying opportunity despite the fact that shares are still down 85% from their prior top.
A recent buy recommendation and $25 price target were maintained by the company, which is in line with the average price target of all analysts that have covered the stock.
The stock price is affected by several things. After falling somewhat to 20.3 million in the third quarter of fiscal 2023, the corporation is finding it difficult to increase its active client count.
At the same time, Chewy's net loss for the quarter came to $35.8 million, down from $2.3 million in the same quarter last year. Investors would rather not see slow growth and poor profitability together.
Investors are being tested by Chewy, but a few things could show that Needham's analyst was correct. Among pet supply brands, Chewy is at the top. The increasing number of people who own pets bodes well for the future of this lucrative industry.
Shares are also selling at a discount to the market average, with a price-to-sales ratio of 0.67. The stock may be priced very low due, in part, to management's desire to invest in automated fulfillment facilities in order to increase earnings in the long run.
Because of these factors, the stock might reach the analyst's price objective this year—but only if the firm can demonstrate that its recovery is gaining momentum in the coming quarters
Even at these discounted share prices, Chewy still has enormous long-term development potential, making it a potentially lucrative investment.
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