RBC Throws Chewy a Bone: Profitability in 2020

By Kim Khan

Investing.com – Chewy (NYSE:) enjoyed a belated National Pet Day celebration (it was Thursday), as shares jumped Friday.

Shares of the online pet food and supply company rose 5% in midday trading.

RBC Capital Markets upgraded the stock to outperform from sector perform with a price target of $38, saying this could be the year that Chewy moves into the black on its bottom line.

“Near-term, we look to FY20 as quite possibly being a Profitability Inflection Year (PIY),” RBC analyst Mark Mahaney wrote.

Longer term Chewy is a company with “strong sustainable fundamentals,” including a compound annual growth rate (CAGR) of 25% and annual gross margin expansion of 100 basis points or more, Mahaney added.

Of the 13 analysts covering the company, there are nine buy ratings and four neutral ratings, according to Investing.com.

The average price target is $35.91.

Shares are up 35% in the last three months.

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