Chewy (NYSE:CHWY) Shares Down 5% on Analyst Downgrade

Key Points

• Chewy shares fell 5% to about $20 after Royal Bank of Canada cut its price target from $34 to $31, while maintaining an Outperform rating.
• Analyst sentiment remains generally positive, with a “Moderate Buy” consensus and an average target price of $30.64, despite several recent target reductions.
• Chewy’s latest quarter showed 7.3% revenue growth to $3.33 billion and EPS of $0.36, beating estimates; however, investors remain focused on slowing growth, recurring-revenue durability and weaker free cash flow.

Shares of Chewy (NYSE:CHWY - Get Free Report) fell 5% on Friday after Royal Bank Of Canada lowered their price target on the stock from $34.00 to $31.00. Royal Bank Of Canada currently has an outperform rating on the stock. Chewy traded as low as $19.97 and last traded at $20.0170. Approximately 1,104,210 shares were traded during trading, a decline of 87% from the average session volume of 8,491,088 shares. The stock had previously closed at $21.08.

Several other analysts also recently commented on the company. Barclays cut their target price on Chewy from $40.00 to $36.00 and set an "overweight" rating on the stock in a research note on Thursday, June 11th. JPMorgan Chase & Co. lowered their price target on Chewy from $35.00 to $29.00 and set an "overweight" rating on the stock in a report on Thursday, June 11th. Moffett Nathanson set a $28.00 price objective on Chewy in a research report on Thursday, June 11th. Wolfe Research reiterated an "outperform" rating and issued a $27.00 price objective on shares of Chewy in a report on Thursday, June 11th. Finally, Jefferies Financial Group reissued a "hold" rating and issued a $23.00 target price on shares of Chewy in a research report on Thursday, June 11th. One analyst has rated the stock with a Strong Buy rating, seventeen have issued a Buy rating and eight have given a Hold rating to the company. According to data from MarketBeat.com, the company currently has an average rating of "Moderate Buy" and a consensus target price of $30.64.

Insider Buying and Selling

In related news, General Counsel Da-Wai Hu sold 4,203 shares of the company's stock in a transaction on Monday, June 29th. The stock was sold at an average price of $19.49, for a total transaction of $81,916.47. Following the completion of the sale, the general counsel owned 4,103 shares in the company, valued at approximately $79,967.47. This represents a 50.60% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through the SEC website. Company insiders own 0.34% of the company's stock.

Key Headlines Impacting Chewy

Here are the key news stories impacting Chewy this week:

• Positive Sentiment: Second-quarter revenue increased 7.3% year over year to $3.33 billion, slightly exceeding estimates, while adjusted EPS of $0.36 was in line with consensus. Customer growth, Autoship sales and cost controls supported the results. CHWY Q2 Earnings Meet Estimates, Sales Beat on Customer Growth
• Positive Sentiment: Management raised portions of its fiscal 2026 revenue and profitability outlook. Stable demand for essential pet products, market-share gains, Autoship growth and potential AI-driven efficiencies provide support for the longer-term investment case. Chewy Q2 Earnings Call Highlights Stable Demand and Higher Outlook
• Positive Sentiment: Some analysts remain constructive: Citizens JMP maintained an outperform rating with a $28 target, while TD Cowen and Bank of America reiterated Buy ratings despite trimming their targets. Longer-term opportunities include veterinary services and other higher-margin businesses. Chewy Buy Rating Reaffirmed
• Neutral Sentiment: Chewy’s recurring-revenue model remains a central investor debate. Autoship sales reached approximately $2.8 billion, but the company is not assuming a meaningful recovery in discretionary pet spending, limiting near-term growth catalysts. Chewy’s Sell-Off Puts Its Recurring Revenue Story Back on Trial
• Negative Sentiment: Free cash flow came in below expectations, while flat gross margins and weaker liquidity following acquisition-related spending increased concerns about the quality and sustainability of earnings. Free Cash Flow Miss Overshadows Raised Outlook
• Negative Sentiment: Analyst sentiment has become more cautious amid slowing organic growth and limited catalysts. JPMorgan reaffirmed Neutral but cut its price target to $24 from $29; Rosenblatt also lowered its target to $24 and retained Neutral. Chewy Posts In-Line Q2 Earnings

Institutional Investors Weigh In On Chewy

Large investors have recently made changes to their positions in the company. Wellington Management Group LLP increased its holdings in Chewy by 295.9% during the third quarter. Wellington Management Group LLP now owns 17,622,768 shares of the company's stock valued at $712,841,000 after buying an additional 13,171,325 shares during the last quarter. Viking Global Investors LP boosted its stake in shares of Chewy by 146.9% during the 4th quarter. Viking Global Investors LP now owns 13,536,645 shares of the company's stock worth $447,386,000 after acquiring an additional 8,052,955 shares during the last quarter. AQR Capital Management LLC grew its position in shares of Chewy by 120.2% during the 3rd quarter. AQR Capital Management LLC now owns 10,196,146 shares of the company's stock valued at $407,948,000 after acquiring an additional 5,564,803 shares during the period. California State Teachers Retirement System grew its position in shares of Chewy by 1,828.1% during the 2nd quarter. California State Teachers Retirement System now owns 5,042,544 shares of the company's stock valued at $99,086,000 after acquiring an additional 4,781,020 shares during the period. Finally, Norges Bank purchased a new stake in shares of Chewy in the 4th quarter worth $154,647,000. 93.09% of the stock is currently owned by institutional investors.

Chewy Price Performance

The company has a current ratio of 0.84, a quick ratio of 0.35 and a debt-to-equity ratio of 1.59. The stock has a market capitalization of $8.11 billion, a PE ratio of 30.02, a price-to-earnings-growth ratio of 0.83 and a beta of 1.42. The firm has a 50 day moving average price of $22.44 and a 200 day moving average price of $23.09.

Chewy (NYSE:CHWY - Get Free Report) last released its earnings results on Wednesday, September 9th. The company reported $0.36 earnings per share for the quarter, beating the consensus estimate of $0.18 by $0.18. The company had revenue of $3.33 billion for the quarter, compared to the consensus estimate of $3.32 billion. Chewy had a return on equity of 60.88% and a net margin of 2.09%.During the same period in the previous year, the business earned $0.33 earnings per share. Chewy's quarterly revenue was up 7.3% compared to the same quarter last year. Research analysts anticipate that Chewy will post 0.8 earnings per share for the current year.

About Chewy

Chewy, Inc is an e-commerce company focused on pet products and services. Through its website and mobile applications, the company sells pet food, treats, supplies, toys, bedding, medications, and other products for dogs, cats, fish, birds, reptiles, and small pets.

Chewy supports recurring purchases through its Autoship program and provides access to prescription and over-the-counter pet medications through Chewy Pharmacy. The company also offers pet health-related services, including veterinary consultations in certain markets, and sells products under a range of national and private-label brands.

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