Chewy stock price hits record highs on earnings beat

Shares of Chewy (NYSE: CHWY) hit fresh record highs yesterday after the company reported higher-than-expected quarterly earnings. The buyers are now likely to target a trip towards $54, where the next resistance is located.

Fundamental analysis: Chewy beats estimates

Chewy, an online pet product retailer, reported a loss of $0.15 per share compared to expectations of $0.17 per share for the quarter ending February 02. Revenue matched estimates, coming in at $1.35 billion, up 24% from $1.09 billion in the year-earlier quarter. 

“We completed 2019 with strong fourth-quarter results, delivering net sales growth of 35% and expanding our gross margins by 320 basis points,” Chewy CEO Sumit Singh said. 

“We believe this was evidence of pandemic-related pantry-stocking and we estimate this benefited our first-quarter net sales by approximately $70 million. We view this as a one-time benefit that we have not seen reverse in the second quarter, and we do not expect to see it reverse going forward.”

Chewy said it expects its sales to come in the region of $1.62 billion to $1.64 billion in the second quarter, higher than $1.56 billion expected from analysts. Looking on an annual basis,  the online pet retailer forecasts sales between $6.55 billion to $6.65 billion, again better than $6.43 billion expected from Wall Street. 

“While 2019 closed on a high note, and 2020 got off to a strong start, the world changed dramatically with the coronavirus outbreak. In times like these, we know how special and comforting the bond is between humans and pets, and we devote ourselves every day to supporting those special relationships,” Singh added.

Technical analysis: New record highs

Chewy stock price surged more than 5% yesterday following the release of the quarterly earnings report. Shares of the pet retailer went north of $52 for the first time ever as the company finds itself on an exclusive list of stocks that have made gains as a result of the COVID-19 outbreak. 

Following a break of the resistance area around $52, the buyers were able to extend the uptrend for more than 10% and print the new record highs. They are now likely to target the next resistance area, coming between $54 and $55, while the broken resistance area will now transform into support.

Summary

Chewy stock price hit record highs after the company reported better-than-expected results for its fiscal fourth quarter. The price action broke above an important resistance at $47, which now paves the way for higher levels around $55.