Broker Recommendation 20230206: Chewy.NYSE

*One Stock Before the Bell*

*Chewy (NYSE: CHWY)*
$48.73 (31.42% YTD)

Chewy is an *online retailer* of pet food and other pet-related products. It runs a retail website and a mobile app. According to the *American Pet Products Association*, *online shopping by pet owners* increased by almost 20% in 2021, up from 72% to 86%. A majority of Chewy's customers *buy items on a subscription basis via the Autoship program*- allowing them to *place an ongoing order and get their items at recurring intervals*. This provides a form of *recurring revenue* and serves as a *customer retention tool*.

Chewy has displayed *pricing power*, being able to *execute their price hikes and maintain their competitive position* in the market. *Q3 revenue and EPS* grew by 12.76% YoY and 106/75% respectively. *Average Revenue per Customer* also increased by 13.84% YoY. The stock appears undervalued at a *Enterprise Value/Revenue ratio of 1.8x*, a *23% discount* to its 2Y average EV/Rev.