Seaport Global Securities upgrades Chewy stock to Buy on strong growth

Investing.com - Seaport Global Securities upgraded Chewy Inc. (NYSE:CHWY) from Neutral to Buy on Thursday, setting a price target of $47.00 following the company’s second-quarter results. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis, despite a 14.7% decline over the past week. Five analysts have recently revised their earnings expectations upward for the upcoming period.

The pet products retailer reported solid second-quarter revenue growth of 8.6% year-over-year, with continued strength in net sales per active customer (NSPAC) and strong gross margin performance, according to Seaport Global. The company’s trailing twelve-month revenue reached $12.3 billion, with a healthy gross margin of 29.45%.

The research firm noted that Chewy shares declined after earnings primarily due to higher SG&A costs, which should see second-half leverage, and incremental investments in initiatives like Chewy+ and fresh food offerings during the second half of the year.

Seaport Global views these investments as "offensive" moves that should enable Chewy to further gain market share in the pet products industry, where it already holds a leading position with a strong brand in the U.S. market.

The firm expects Chewy to achieve high-single digit long-term revenue growth driven by low-single digit customer growth and mid-single digit NSPAC growth, along with potential for 10%+ long-term EBITDA margins from scale efficiencies and higher margin product areas including health and fresh food.

In other recent news, Chewy Inc . reported its second-quarter 2025 earnings, revealing steady growth in both revenue and earnings per share (EPS). The company posted an EPS of $0.33, which aligned with analyst forecasts, while revenue slightly surpassed predictions at $3.1 billion. William Blair reiterated an Outperform rating on Chewy, highlighting the company’s modest upside in sales, gross margin, and adjusted EBITDA. Additionally, Chewy added 150,000 active customers sequentially, exceeding sell-side consensus expectations. On the analyst front, Citizens JMP maintained its Market Outperform rating for Chewy, citing increased service stickiness and strong customer engagement through its Chewy+ subscription program. In contrast, BNP Paribas Exane lowered its price target for Chewy to $34.00, expressing concerns over high market expectations. Despite the mixed analyst views, Chewy’s recent developments reflect ongoing interest in its market performance and strategic initiatives.

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