Chewy (CHWY) Q1 Earnings Drop Tomorrow—Will the Stock Bite or Play Dead?

Wall Street braces for Chewy's quarterly report—another chance for pet retail to outperform human retail. Analysts sharpen claws, shareholders hold their breath.

What to watch: Revenue growth, subscriber trends, and whether management blames 'seasonal factors' or actually admits inflation hit pet parents. Because nothing says 'bullish' like blaming the weather.

Closing thought: If earnings miss, expect the usual corporate yoga—'strategic investments' means losing money, 'rightsizing' means layoffs, and 'macro headwinds' means we got caught napping.

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Wall Street analysts expect the company to report earnings of $0.17 per share, reflecting more than 13% year-over-year growth. Meanwhile, revenues are expected to grow by 7% from the year-ago quarter to $3.08 billion, according to data from the TipRanks Forecast page. It’s important to note that Chewy has outperformed EPS estimates in seven of the past nine quarters.

Analyst’s Views Ahead of CHWY’s Q1 Print

Ahead of the Q1 report, Mizuho Securities analyst David Bellinger downgraded Chewy to Holdbut raised the price target to $47 from $43. He acknowledged that customer and revenue growth have improved in recent quarters but believes these positives are already priced in, especially after the stock’s sharp 55% rally from April lows. “We wouldn’t be putting new money to work at these levels,” Bellinger wrote, pointing to the stock’s forward EV/EBITDA multiple of over 22x, which he considers stretched.

Despite the downgrade, Mizuho still expects Chewy to beat estimates in Q1. The firm projects 8–9% revenue growth, ahead of Chewy’s own guidance of 6–7%. That said, Bellinger believes the market will pay close attention to management’s commentary on Q2 trends and the full-year outlook. For the rally to continue, he believes Chewy needs to report strong active customer growth, improving margins, and a clear pickup in revenues.

According to Main Street Data, Chewy’s active customer base increased about 2% year-over-year to 20.5 million in Q4 2024, the first year-over-year growth in the past eight quarters.

Options Traders Anticipate a Large Move

Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings MOVE is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.

Indeed, it currently says that options traders are expecting a 9.31% move in either direction.

Is Chewy a Good Stock to Buy?

Overall, Wall Street has a Moderate Buy consensus rating on Chewy stock based on 17 Buys and seven Hold recommendations. Given the solid year-to-date rally, the average CHWY stock price target of $43.45 implies about 6.58% downside risk for current levels.