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Investing.com - Evercore ISI maintained its Outperform rating on Chewy Inc. (NYSE:CHWY) with a price target of $52.00, according to a research note released Tuesday. According to InvestingPro data, this target represents a 31% upside from current levels, with the stock currently trading at a P/E ratio of 42.5x.
The firm cited stabilization in the U.S. pet industry after a two-year decline, with evidence of cyclical growth and continued online penetration. Evercore ISI views Chewy’s heavily subscription-based model, with 80% of revenue coming from Autoship services, as economically resilient. The company’s revenue growth of 7.7% in the last twelve months supports this view.
The research firm identified Chewy as a clear online pet industry leader with consistently high satisfaction scores, which it believes is driving a return to sustained user growth as supported by recent earnings results.
Evercore ISI outlined a path for gross margin expansion through pet health products, private label offerings, and particularly advertising revenue. The firm also expects EBITDA margin improvement, with marketing spend becoming a source of leverage likely in fiscal year 2026.
The research note highlighted improved free cash flow generation for Chewy, which Evercore believes carries positive implications for both valuation and potential capital returns to shareholders.
In other recent news, Chewy Inc . has been the subject of several analyst ratings and consumer surveys. Piper Sandler has maintained its Overweight rating on Chewy, with a price target of $48.00, despite the company’s stock declining by 15% since early June. This follows Chewy’s Q1 2025 earnings report, where the company maintained its annual sales and EBITDA guidance instead of raising it. Citizens JMP also reiterated its Market Outperform rating and $48.00 price target, anticipating better-than-expected results for Chewy’s fiscal second-quarter 2026, driven by new veterinary clinics and advertising growth. The firm expressed confidence in Chewy’s outlook beyond the current quarter, expecting the company to raise its forward estimates.
Additionally, a consumer survey by RBC Capital Markets revealed that Chewy’s popularity among pet owners has increased, with 48% of pet owners shopping at Chewy in the last 12 months. Meanwhile, Barclays maintained its Overweight rating and $50.00 price target, noting the stock’s recent 14% decline amid modest negative estimate revisions. Barclays was surprised by the stock’s continued weakness, especially after a significant sale by BC Partners, which was expected to clear short-selling pressures. These developments reflect ongoing interest and varied perspectives on Chewy’s market performance and future prospects.
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