Chewy (CHWY) exceeded expectations in fiscal Q4 for both revenue and profit, driven by better-than-expected active customer growth and strong hardgoods sales, Wedbush said in a note on Thursday.

The company reported adjusted earnings of $0.28 per diluted share, up from $0.18 a year earlier and beating FactSet's $0.21 estimate. Net sales rose to $3.25 billion from $2.83 billion a year earlier, also surpassing FactSet's $3.20 billion forecast.

Net customer additions accelerated for the third straight quarter, helping active customers grow year-over-year for the first time since 2022. However, net spending per customer slightly missed estimates and remained flat sequentially after adjusting for the extra week.

Gross margin was slightly below expectations due to higher shipping costs and tougher year-over-year comparisons from the prior year's initial sponsored ads benefits. While sponsored ads contributed to margin gains, growth was increasingly driven by lower-margin offsite ads, which could limit future gross margin expansion.

Chewy's fiscal 2025 revenue guidance was in line with expectations, but Wedbush sees it as conservative and expects sales to lean toward the high end of the range.

Wedbush reiterated its outperform rating on Chewy stock and kept the price target at $39.

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