Chewy
CHWY (NYSE)
Chewy stands out as a promising small/mid-cap investment, with expectations of reaching a 10% EBITDA margin by the end of 2028, driven by increasing advertising revenue and automation. Despite a challenging current performance, reflected in a one-year return of -19.70% and a staggering five-year drop of -69.90%, analysts maintain a cautiously optimistic outlook, with a median 12-month price target of $49.00. Notably, firms like Morgan Stanley and Goldman Sachs have reiterated their Overweight and Buy ratings, suggesting potential for recovery as revenue is projected to grow by 8% in fiscal 2027.
Pros:
- Potential for future growth
- Strong e-commerce presence
Cons:
- Recent negative performance
- High competition in retail
Chewy (CHWY) may be suitable for investors with a higher risk tolerance who are seeking exposure to the pet care market and are willing to overlook recent underperformance in favor of potential long-term growth as the company aims to improve its EBITDA margins and revenue streams. However, those looking for immediate returns or dividend income may want to consider alternative investments given its current lack of dividends and significant historical losses.