Chewy reinstated at Underperform by BofA on weak pet market By Investing.com

BofA reinstated coverage of online pet retailer Chewy (NYSE:) with an Underperform rating and $16 price target in a note on Thursday.

Analysts say the weak pet market is pressuring fundamentals for the company.

“Chewy is a leading player in pet eCommerce. However, weakening industry fundamentals are pressuring revenue growth and margin expansion, which is likely to continue to weigh on valuation,” they explained.

“Over the past decade, the pet market has been one of the most consistent growers, but a significant decline in pet adoptions, inflation, and trade-down activity are now impacting trends,” analysts added.

The investment bank expects Chewy’s revenue growth to decelerate 7ppts to 5% year-over-year in 2024. Furthermore, they said the $16 price target reflects the limited opportunities for multiple expansion until customer and revenue trends improve.

After a more than 6% decline in Wednesday’s session, Chewy shares were down 0.6% premarket Thursday.

By hadem