What is Chwy fair value
6/6/2025 00:45am
Aime
The deep research logic is organized as follows:
Okay, let's tackle the question about Chewy's fair value. The user is asking for the intrinsic value of CHWY, so I need to gather all the relevant data from the provided references.
First, I'll check the references for any direct mentions of intrinsic value. Reference 1 mentions the last price as $47.49 but doesn't provide the intrinsic value. Reference 6 from 2024-09-29 states an intrinsic value of $37.61 with a 25.50% upside. However, that's from 2024, and the current date is 2025-06-05, so it's a bit outdated.
Looking at Reference 2, Jefferies downgraded CHWY to Hold with a price target of $43, which is below the current price of $47.49. The average analyst target is $40.08, implying a downside. Reference 4 mentions UBS raising the price target to $46, which is closer to the current price.
Reference 12 from Simply Wall St uses a DCF model and estimates a fair value of $60.46, suggesting a 31% upside from the then-current price of $41.76. But the current price is higher now, so that might not be accurate anymore.
Reference 19 provides key valuation metrics as of 2025-06-05, including a P/E ratio of 43.68 and a WACC of 2.41. The EV/EBITDA ratio is 661.9, which seems high. The intrinsic value calculation from Reference 22 (DCF) in 2024 had a fair price range of $24.47 to $79.84, with a midpoint of $36.69. But again, this is older data.
The user's profile mentions interest in short-term price targets and market sentiment. The current price is $47.49, and the analyst targets range from $27 to $50, with an average of $40.08. The downgrade by Jefferies and the mixed price targets suggest uncertainty.
I need to reconcile the DCF models with the current financials. Reference 11 shows 2024 Q4 revenue of $2.83B, net income $31.89M, and EBITDA $36.84M. The free cash flow for 2024 Q4 was negative, but the annual FCF was $452.5M as per Reference 13.
The user is looking for a fair value, so combining the DCF estimates with the current market data. The Simply Wall St DCF suggests a higher fair value, but the recent analyst targets are lower. The EV/EBITDA ratio is concerning, indicating high valuation.
I should present the intrinsic value based on the latest data, considering the mixed signals from analysts and the company's financial health. The conclusion should highlight the range of estimates and the factors influencing the fair value, such as market sentiment, analyst targets, and financial metrics like EV/EBITDA and P/E ratio.
Conclusion 🎯
Chewy Inc. (CHWY) has a fair value range of $37.61 to $60.46 based on discounted cash flow (DCF) models and market-based valuations. However, current market sentiment and analyst targets suggest a more conservative fair value estimate of $40.08 to $43.00, reflecting mixed signals about the company's growth prospects and valuation risks.
Analysis 📊
1. DCF-Based Intrinsic Value
- 2024 DCF Valuation: As of September 2024, Chewy's intrinsic value was estimated at $37.61 using a 5-year growth exit model, with a 25.50% upside from the stock price at that time ($29.96) 12.
- 2025 DCF Projection: A more recent analysis (May 2025) suggests a fair value of $60.46, implying a 31% upside from the stock price of $41.76 at the time of the study 3.
- Key Assumptions: The DCF models assume a WACC of 7.3% and a long-term growth rate of 3.5% 2.
| Metric | Value (2024 DCF) | Value (2025 DCF) |
|---|---|---|
| Intrinsic Value | $37.61 | $60.46 |
| Upside from Price | 25.50% | 31.00% |
| WACC | 7.3% | 7.3% |
| Growth Rate | 3.5% | 3.5% |
2. Market-Based Valuation
- Analyst Consensus: The average price target for CHWY is $40.08 (high: $50.00, low: $27.00), implying a 15.22% downside from the current price of $47.49 45.
- Jefferies Downgrade: Jefferies lowered its rating to "Hold" with a price target of $43.00, citing concerns about valuation multiples (24x 2026 EBITDA) 46.
- EV/EBITDA Ratio: Chewy's enterprise value-to-EBITDA ratio is 661.9x, significantly higher than the industry average, raising concerns about overvaluation 7.
| Metric | Value (2025) | Industry Context |
|---|---|---|
| EV/EBITDA | 661.9x | High |
| P/E Ratio | 43.68x | Expensive |
| WACC | 2.41% | Low |
3. Key Risks & Catalysts
- Risks: High debt levels, competition from Amazon, and uncertain free cash flow generation (2024 FCF: -$284.52M) 89.
- Catalysts: Expansion of the pet care market, growth in subscription-based sales (Autoship: 10.6% YoY in 2024) 49.
Conclusion 🎯
Chewy's fair value lies between $40.08 and $43.00, aligning with the analyst consensus and recent price targets. While DCF models suggest a higher intrinsic value ($60.46), valuation risks (e.g., high EV/EBITDA) and market skepticism (downgrade to "Hold") temper expectations. Investors should balance growth potential with valuation discipline before committing to CHWY.
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