Chewy (CHWY) Shares Could Double on Profit Outlook, Morgan Stanley Says

Chewy's Stock Has Been on a Tear

Shares of Chewy (CHWY) have been on a tear lately, rising over 50% in the past year. The pet supplies retailer has been benefiting from the growing popularity of online shopping, as well as from its own focus on customer service and convenience. Chewy now has over 20 million active customers, and it is on track to generate over $10 billion in revenue this year.

Morgan Stanley is Bullish on Chewy

In a recent research note, Morgan Stanley analyst Simeon Gutman upgraded Chewy's stock to "overweight" from "equal weight." Gutman raised his price target on the stock to $140, which implies a potential upside of over 100% from current levels. He believes that Chewy is well positioned to continue to grow its market share in the pet supplies market and improve its profitability.

Chewy's Profitability is Improving

One of the key factors behind Morgan Stanley's bullishness on Chewy is the company's improving profitability. Chewy has been investing heavily in its business in recent years, including expanding its product offerings, improving its customer service, and building out its fulfillment network. These investments are now starting to pay off, as Chewy's gross margin has improved significantly in the past year. The company is also benefiting from operating leverage, as its fixed costs are spread out over a larger revenue base.

Chewy's Outlook is Positive

Chewy's outlook is positive as the company is seeing continued growth in its customer base and order volume. The company is also investing in new initiatives, such as its subscription service and its Chewy Health insurance product. These initiatives should help to drive further growth in the years to come.

Conclusion

Chewy is a well-positioned company in a growing market. The company is benefiting from its focus on customer service and convenience, as well as from its improving profitability. Morgan Stanley's bullish outlook on Chewy is justified, and the stock has the potential to double in the coming years.