Is CHWY's Q1 2026 earnings forecast optimistic?

**CHWY's Q1 2026 earnings forecast appears optimistic**, considering the following points: 1. **Analyst Ratings and Price Targets**: - RBC Capital Markets maintains an "Outperform" rating with a $42.00 price target, indicating confidence in Chewy's positive trajectory. - JMP reiterates a "Market outperform" rating with a $37.00 price target, suggesting resilience amid industry challenges. - Seaport Global starts coverage with a "Neutral" rating, acknowledging Chewy's strong market position but also noting challenges. 2. **Financial Estimates and Growth Projections**: - RBC has raised its estimates for Q1 net sales growth to 7.6% and adjusted EBITDA margin to approximately 6.6%, reflecting growing conviction in Chewy's performance. - JMP expects an approximate 13% year-over-year revenue growth, with current expectations for increased active buyers and net sales per active customer. - Seaport Global expects revenue growth, citing Chewy's strong brand and potential for growth through market share increases and new sectors like pet healthcare. 3. **Historical Performance and Expectations**: - CHWY has a history of exceeding earnings expectations, achieving its fifth consecutive quarter of doing so, driven by significant top-line growth. - The consensus for Q1 2025 earnings (EPS of $0.20 and revenue of $2.84B) suggests a positive outlook, with CHWY having beaten EPS estimates 88% of the time and revenue estimates 63% of the time over the last 2 years. 4. **Key Growth Drivers and Operational Efficiency**: - Chewy's growth is supported by increased active customer numbers, rebounding hard goods sales, and strong Autoship customer loyalty, which accounted for 80.6% of total sales. - The company's margin improvements and sponsored advertising business's contribution to net sales highlight operational efficiency and revenue streams. Overall, the optimistic earnings forecast for CHWY's Q1 2026 is supported by analyst ratings, financial estimate adjustments, historical performance, and key growth drivers.