Mizuho maintains Chewy stock Outperform with $43 target

On Thursday, Mizuho (NYSE:MFG) Securities reaffirmed its positive stance on Chewy Inc . (NYSE:CHWY), maintaining an Outperform rating and a $43.00 price target. The reaffirmation comes amidst news that Amazon (NASDAQ:AMZN) is initiating its pet pharmacy business, a move that has resulted in Chewy’s shares declining by 2-3%. Amazon, with its massive $2.01 trillion market capitalization and "GREAT" financial health score according to InvestingPro, poses formidable competition. However, analysts at Mizuho believe there is ample room for multiple players in the online pet care market.

Chewy and Amazon are both major contenders in the online pet products industry, each holding approximately 30-40% of the market share. Amazon, generating $637.96 billion in revenue with an 11% growth rate, sees the pet pharmacy sector as a natural expansion opportunity, mirroring the strategies of other retailers like Walmart (NYSE:WMT) and Tractor Supply (NASDAQ:TSCO). However, Chewy is distinguishing itself by establishing physical veterinary clinics to provide services beyond the online offerings.

The recent development concerning Amazon’s move into the pet pharmacy space is not seen by Mizuho analysts as a significant deterrent to Chewy’s growth prospects. They underscore that Chewy’s strategy of integrating physical vet clinics positions the company to offer a differentiated service compared to solely online-focused competitors.

Mizuho’s analysis suggests that the online pet care and pharmacy market is large enough to support various competitors, including Chewy and Amazon. The firm’s reiteration of the Outperform rating indicates confidence in Chewy’s business model and its ability to coexist and thrive even as Amazon expands its footprint in this niche.

The endorsement from Mizuho underscores the belief that Chewy’s initiatives, such as the expansion into physical vet services, will continue to strengthen its market position. Despite the immediate market reaction to Amazon’s announcement, Mizuho’s outlook for Chewy remains unchanged, with the company still considered a Top Pick by the firm. For deeper insights into both companies’ competitive positions and financial metrics, InvestingPro offers comprehensive analysis through its Pro Research Reports, covering over 1,400 US stocks with detailed metrics and expert analysis.

In other recent news, Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:META) both reported quarterly results that surpassed expectations, leading to significant premarket trading gains of up to 8.1% and 6.9%, respectively. Microsoft’s strong performance was driven by its thriving cloud business, which continues to benefit from the growing demand for AI services. Meta not only exceeded expectations in its first-quarter results but also raised its full-year forecast for capital expenditures, focusing on AI investments. Meanwhile, Amazon has launched its first 27 satellites for Project Kuiper, a $10 billion initiative aimed at providing global broadband internet, marking a challenge to SpaceX’s Starlink network.

Amazon also faced scrutiny from President Trump over a report suggesting the company planned to display prices reflecting tariff impacts, a claim Amazon denied. Additionally, UBS analyst Stephen Ju lowered Amazon’s stock price target to $253 from $272 while maintaining a Buy rating, citing adjustments in growth projections for Amazon’s global gross merchandise volume and Amazon Web Services. Ju’s report also detailed expectations for Amazon’s revenue and operating income to be at the higher end of the guidance range. Lastly, Tesla (NASDAQ:TSLA) raised its prices in Canada and encouraged purchases of imported electric vehicles before counter-tariffs are imposed, while Nvidia (NASDAQ:NVDA)’s shares fell amid Huawei’s announcement of testing a new AI processor.

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