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Investing.com - RBC Capital has lowered its price target on Chewy Inc. (NYSE:CHWY) to $43.00 from $44.00 while maintaining an Outperform rating. The stock, currently trading at $35.11, has experienced a sharp 14.7% decline over the past week, according to InvestingPro data.
The adjustment comes as RBC analyst Steven Shemesh noted that while the pet category remains stable and Chewy continues to gain market share, margins aren’t progressing as quickly as investors had anticipated. Despite these concerns, the company maintains a healthy 29.45% gross profit margin and has achieved profitability over the last twelve months.
For the third quarter, RBC adjusted its net sales growth estimate to 8.1%, up from a previous estimate of 7.2%, while lowering its adjusted EBITDA estimate to $170 million from $177 million previously.
Looking further ahead, RBC now models 2025/2026 net sales growth of 6.0%/8.5%, a slight adjustment from previous estimates of 5.5%/8.5%, with adjusted EBITDA projections of $694 million/$844 million, down from $699 million/$871 million.
The new price target is based on approximately 21 times RBC’s revised 2026 adjusted EBITDA estimate of $844 million, with the firm suggesting that recent stock reactions to margin concerns may be overdone. The stock currently trades at an EV/EBITDA multiple of 59.34x, reflecting the market’s high growth expectations.
In other recent news, Chewy Inc . reported its second-quarter results, showing a revenue growth of 8.6% year-over-year. This growth was accompanied by strong performance in net sales per active customer and gross margins. Analysts have responded with mixed reactions to these results. Seaport Global Securities upgraded Chewy’s stock to a Buy rating, setting a price target of $47.00, citing the company’s strong growth. Meanwhile, Jefferies lowered its price target from $44.00 to $41.00, maintaining a Hold rating due to upcoming investment plans. BNP Paribas Exane also adjusted its price target down to $34.00, citing high market expectations as a concern. Citizens JMP and William Blair both reiterated positive ratings, highlighting increasing service stickiness and modest upside in sales and customer growth, respectively. These developments reflect varying perspectives on Chewy’s financial health and future prospects.
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