Chewy Inc. (CHWY) delivered a pleasant surprise to investors Wednesday, reporting third-quarter results that sailed past Wall Street's expectations. For a company selling pet food and supplies, this was anything but a dog-and-pony show.
The numbers tell a compelling story. Chewy posted adjusted earnings of 32 cents per share for the third quarter of fiscal 2025, crushing the analyst consensus of just 13 cents. The figure landed comfortably within management's own guidance range of 28 to 33 cents, suggesting the company knew exactly what was coming.
Revenue climbed 8.3% year over year to $3.117 billion, edging past both the consensus estimate of $3.099 billion and the company's guidance range of $3.07 billion to $3.1 billion. It's the kind of beat that makes analysts recalibrate their models.
"Chewy continues to outperform the pet category and expand market share, with profits once again growing faster than sales," CEO Sumit Singh said in the earnings release. When profits outpace revenue growth, that's usually music to investors' ears.
Looking ahead, Chewy expects fourth-quarter adjusted earnings of 24 to 27 cents per share, roughly double the analyst consensus of 12 cents. The revenue outlook of $3.24 billion to $3.26 billion came in slightly below the Street's $3.272 billion estimate, but given the earnings strength, few seemed concerned.
The company also bumped up its full-year fiscal 2025 sales guidance to a range of $12.58 billion to $12.60 billion, up from the previous $12.50 billion to $12.60 billion. That's a bit shy of the consensus at $12.67 billion, but the adjusted EBITDA margin guidance improved to 5.6% to 5.7% from the prior 5.4% to 5.7% range.
Despite the earnings beat, Chewy shares fell 2.15% to $34.47 on Thursday. Markets can be funny that way sometimes, focusing on forward guidance rather than celebrating the present.
Wall Street analysts weren't deterred by the modest stock decline. Following the earnings announcement, two prominent firms raised their price targets:
- Barclays analyst Trevor Young maintained an Overweight rating and lifted his price target from $47 to $52.
- Goldman Sachs analyst Alexandra Steiger kept her Buy rating while raising her target from $44 to $52.
Both analysts now see roughly 50% upside from Thursday's trading price, suggesting they believe the market is undervaluing Chewy's growth trajectory and profitability improvements.
