Chewy, Inc. (NYSE:CHWY) just released its third-quarter report and things are looking bullish. Revenues and losses per share were both better than expected, with revenues of US$1.2b leading estimates by 2.1%. Losses were smaller than analysts expected, coming in at US$0.20 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what analysts are forecasting for next year.
Taking into account the latest results, the latest consensus from Chewy's eleven analysts is for revenues of US$6.23b in 2021, which would reflect a major 36% improvement in sales compared to the last 12 months. Losses are forecast to balloon 41% to US$0.38 per share. Yet prior to the latest earnings, analysts had been forecasting revenues of US$6.11b and losses of US$0.33 per share in 2021. So there's definitely been a decline in analyst sentiment after the latest results, noting the substantial drop in new EPS forecasts.
As a result, there was no major change to the consensus price target of US$34.91, with analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Chewy at US$42.00 per share, while the most bearish prices it at US$27.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
Further, we can compare these estimates to past performance, and see how Chewy forecasts compare to the wider market's forecast performance. We can infer from the latest estimates that analysts are expecting a continuation of Chewy's historical trends, as next year's forecast 36% revenue growth is roughly in line with 41% annual revenue growth over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 17% per year. So it's pretty clear that Chewy is forecast to grow substantially faster than its market.
The Bottom Line
The most important thing to take away is that analysts reconfirmed their loss per share estimates for next year. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Chewy's revenues are expected to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Chewy analysts - going out to 2024, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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