Chewy: Plan to Trim Valuation on Slower-Than-Expected Growth, Better Profits Positive; Shares Cheap

We plan to lower our $38 fair value estimate for narrow-moat Chewy by a mid-single-digit percentage after digesting the firm's investor day presentation, with slower projected sales growth more than offsetting encouraging margin guidance. We expect to trim our growth expectations substantially—to an 8.1% 10-year annual growth rate from 10.3% prior—in line with long-term guidance for high-single-digit annual expansion. Simultaneously, we plan to nudge up our 2032 operating margin estimates to 7.8% from 6.9% previously as we incorporate the impact of 15% EBITDA margin flow-through guidance and margin accretion from healthcare, ads, and automation initiatives.