Chewy Analyst Steps To Sidelines On Valuation Concerns - Retail Agrees

Jefferies downgraded Chewy (CHWY) stock to 'Hold' from 'Buy' on Thursday, citing high valuation and limited near-term upside.

The pet supplies retailer has bucked the tariff-driven downturn in the market, with its shares rising nearly 42% year-to-date.

In an investor note, Jefferies said the stock trades at 24 times its 2026 EBITDA forecast, over eight times what it was in March, according to The Fly.

The current levels factored in strong Q1 results and a guidance raise, which Jefferies thinks are unlikely.  The company is scheduled to report its quarterly results on June 11, before the market opens.

The investment advisor noted the pet supplies sector remains relatively stable, with Chewy performing solidly. A CFO transition is underway, and much of the upside appears to be priced into the stock.

Still, Jefferies noted a lack of near-term catalysts, pointing to modest growth in pet-owning households and U.S. consumer spending.

It raised its price target on the stock to $43 from $41. The updated target is 9.5% lower than the current stock price of $47.49.

On Stocktwits, the retail sentiment for the company's shares dropped to 'neutral' from 'bullish' the previous day.

A user suggested that the stock is still worth buying as long as it trades above $40.

In recent months, Chewy has expanded its product offerings by launching pet wellness brand Oh Norman! and raw food brand Maev on its platform. 

Additionally, Chewy refreshed its retail media network, Chewy Ads, to enhance advertising solutions for pet brands.

Chewy shares are up 110% over the past 12 months.

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