Chewy’s First-Quarter Revenue Jump Prompts Price Target Increase From Morgan Stanley

Pet food company Chewy (CHWY) posted fiscal first-quarter revenue which was broadly in line with analysts’ estimates after markets closed on Thursday, as its improving net loss prompted Morgan Stanley to raise its price target on the stock.

The Dania, Fla.-based e-commerce company, which was launched in 2011, reported net sales of $1.11 billion in the 13 weeks ended May 5, compared with $763.5 million in the corresponding period of the prior year and in line with the consensus estimate of analysts polled by Capital IQ.

The company improved its net loss by to $29.6 million from $59.8 million a year earlier. The net loss per share was $0.08 compared with a net loss of $0.15 a year earlier. Analysts had expected a net loss of $0.07 per share.

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“We are pleased to report strong first quarter 2019 results as a newly public company with net sales growing 45% year-over-year, and gross margin increasing 330 basis points year-over-year,” Sumit Singh, chief executive officer of Chewy, said. “We will continue to innovate with a keen focus on delivering the best customer experience as we execute on our mission to become the most trusted and convenient online destination for pet parents.”

On June 18, the company closed its initial public offering for which it received net proceeds of approximately $111.5 million after deducting underwriting discounts and commissions of $6.2 million and offering expenses.

On a conference call, the Chief Financial Officer Mario Marte said Chewy is expecting second-quarter net sales between $1.12 billion to $1.14 billion. For fiscal 2019 ending next February, the company sees sales between $4.675 billion to $4.75 billion.