Chewy, Inc. (NYSE:CHWY) just released its second-quarter report and things are looking bullish. Revenues and losses per share were both better than expected, with revenues of US$1.7b leading estimates by 3.8%. Statutory losses were smaller than the analystsexpected, coming in at US$0.08 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Chewy from twelve analysts is for revenues of US$6.82b in 2021 which, if met, would be a notable 16% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 21% to US$0.43. Before this earnings announcement, the analysts had been modelling revenues of US$6.64b and losses of US$0.48 per share in 2021. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for both revenues and losses per share.
It will come as no surprise to learn thatthe analysts have increased their price target for Chewy 12% to US$63.18on the back of these upgrades. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Chewy analyst has a price target of US$75.00 per share, while the most pessimistic values it at US$45.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Chewy's revenue growth is expected to slow, with forecast 16% increase next year well below the historical 40% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 17% next year. So it's pretty clear that, while Chewy's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Chewy going out to 2024, and you can see them free on our platform here..
Even so, be aware that Chewy is showing 3 warning signs in our investment analysis , you should know about...
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