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Evercore ISI took a more fundamental look at Chewy (NYSE:CHWY) amid the drama of Roaring Kitty taking a 6.6% stake in the company.
Evercore ISI’s recent consumer survey indicated a positive, ongoing rising in online pet supplies adoption, as a record-high 85% of respondents said they purchase pet supplies online. The survey results also continued to report intrinsically and relatively very high customer satisfaction scores for Chewy (CHWY). However, on the negative side, the survey noted a sizeable drop in selection of Chewy (CHWY) as a pet supplies online shopping destination. 52% of respondents now shop at Chewy (CHWY) amid more competition, which was down from 64% in the 2022 survey. Walmart (WMT) and PetSmart both scored higher in the survey than in the past.
Analyst Mark Mahaney: “We continue to view Chewy as a solid business that is impacted by broader industry weakness, but still holds many investment positives – consistently rising spend/loyalty per Chewy customer, budding growth opportunities in Sponsored Ads, International expansion, and vertical expansion (e.g. Vet care clinics), and the potential for ongoing Gross & EBITDA margin expansion.”
Shares of Chewy (CHWY) tricked 0.61% higher in premarket trading on Tuesday after a few volatile sessions tied to the Roaring Kitty drama. The online retail stock is up almost 15% over the last six weeks after some wild swings up and down. Short interest on Chewy (CHWY) stands at 14.9% of the total float.