Chewy (CHWY) Stock Forecast & Price Target

Chewy, the leading e-commerce petcare retailer in the US, achieved approximately $11.9 billion in sales for fiscal 2024, reflecting a year-over-year net sales increase of about 0.5% and showcasing strong customer engagement with active customer growth of 3.9%. The company's gross margin expanded by 88 basis points year-over-year, driven by a more favorable product mix and effective marketing strategies, while adjusted EBITDA rose by roughly 30%, demonstrating significant operational leverage. The firm is well-positioned for future growth, supported by investments in veterinary clinics that enhance customer retention and an improved competitive position within the e-commerce sector, solidifying its prospects in the market.

Chewy's current valuation stands at approximately 11.3 times the estimated EBITDA for 2026, significantly below the E-commerce retail peer group average of 16.5 times, indicating potential undervaluation in comparison to competitors. The company's outlook suggests a slowdown in e-commerce penetration within the pet category, coupled with low single-digit industry growth and limited pricing power, which could further challenge sales expansion. Additionally, Chewy's investments in veterinary clinics have not yielded substantial benefits, creating uncertainty around the firm's ability to improve margins and regain its premium market position.