Chewy Inc. (CHWY) is set to report its Q3 earnings on December 4, with BofA Global Research maintaining a "Buy" rating and a price target of $40, up from the current price of $34.46 as of November 26. The report anticipates Chewy's Q3 revenue and EBITDA to surpass Street estimates, forecasting $2.88 billion and $129 million, respectively, compared to the Street's $2.86 billion and $121 million. BofA highlights Chewy's potential to raise its FY'24 EBITDA guidance, driven by strong advertising execution and SG&A leverage, projecting a 4.9% EBITDA margin versus the Street's 4.7%.
The report notes a temporary dip in October sales but sees a rebound in November, supported by data from BofA's aggregated credit and debit card analysis. BofA projects Q4 sales of $3.25 billion, 2.5% above Street estimates, and expects Chewy to leverage gross margin improvements and cost discipline to drive earnings growth. "Our outlook for accelerating topline trends should drive significant earnings growth over the next few quarters," states BofA, emphasizing Chewy's stable model with low tariff exposure and no debt.