Chewy (CHWY) very likely could positively surprise Wall Street when the mail-order pet food and accessories seller reports its 4Q financial results next week, analysts at Wedbush said Monday in a new research note.

In addition to exceeding consensus expectations for Q4 sales, the Wedbush analysts said recent traffic on the company's website suggests Chewy will handily beat internal forecasts looking for 7% to 13% sales growth for the three months ending Jan. 31 - even after subtracting out an extra week in its upcoming results compared with the year-ago period.

For example, Q4 customer traffic appears to be running around 20% higher year-over-year and between 5% to 7% above the previous quarter when Chewy topped sales forecasts by almost 5%, they said, "suggesting considerable upside to our estimate if sequential traffic trends translate to revenue." The Wedbush analysts also anticipate continued positive growth for margins, with a smaller-than-expected rise in freight costs more than offsetting its increased spending on advertising during the quarter.

The Wedbush analysts also are expecting Chewy to maintain a conservative approach with its fiscal 2025 guidance. They see the company growing revenue this year by around 7% compared with the consensus view looking for a 5% increase over 2024 levels as churn headwinds dissipate and recent marketing initiatives bear fruit, reiterating their outperform rating and a $39 price target for Chewy's stock.

Macro-economic factors, including the potential impact of tariffs or a recession on consumer spending, could disrupt Chewy's upward trajectory, the Wedbush analysts caution, although they also note that consumer spending for pets historically has held up during economic downturns.

One other factor possibly weighing on Chewy's share price is BC Partners continuing to sell down a portion of its $8 billion equity stake in the company. The private-equity fund sold about 91.5 million shares during between January 2024 to the start of 2025, Wedbush said, contributing to "minor overhang" for the stock last year and portending a "measured disposition" of the company's stock in 2025, the Wedbush analysts said.

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