Chewy stock price target raised to $47 from $36 at JPMorgan

JPMorgan upgraded Chewy (CHWY) to Overweight with a price target of $47, citing strong financial performance including a 12.7% return on assets and $392.7 million in net income, active customer growth, and profitability improvements. The firm believes the post-earnings pullback is overdone, projecting continued market share gains and better-than-expected revenue, with adjusted EBITDA margins reaching 5.5% in fiscal 2025. Multiple other firms including Morgan Stanley, Jefferies, Goldman Sachs, and Citi have also recently raised their price targets on Chewy.

Analysis

JPMorgan has upgraded its price target for Chewy Inc. (CHWY) to $47 from $36, maintaining an Overweight rating, driven by the online pet retailer's consistent operational execution, robust active customer growth, and notable improvements in profitability. This bullish stance is supported by Chewy's strong financial metrics, including a 12.7% return on assets and $392.7 million in net income over the last twelve months, alongside a healthy balance sheet indicated by an Altman Z-Score of 6.95 and more cash than debt. JPMorgan believes the recent pullback in CHWY shares is "overdone," projecting continued growth with 126,000 active customer additions quarter-over-quarter in Q2 and 656,000 for fiscal 2025, potentially exceeding Chewy's own low-single-digit percentage growth guidance. The investment bank anticipates Chewy will achieve net sales of $3.088 billion in Q2 (an 8% year-over-year increase) and $12.45 billion for fiscal 2025, trending towards the upper end of Chewy's $12.30-$13.45 billion revenue guidance, and forecasts adjusted EBITDA margins reaching 5.5% in fiscal 2025 with $539 million in free cash flow. This positive sentiment is broadly echoed across Wall Street, with Morgan Stanley, Goldman Sachs, Citi, and Jefferies also recently increasing their price targets, citing strong customer acquisition, potential for market share gains driven by initiatives like Autoship and Vet Care clinic expansion, and margin improvements. Despite an impressive 81.8% one-year price return, the consensus points towards further upside, with JPMorgan's $47 target based on approximately 24 times its 2026 estimated adjusted EBITDA.

Key Decisions for Investors

• Investors could consider the recent share price weakness in Chewy as a potential entry point, given the strong underlying fundamentals, multiple positive analyst revisions, and JPMorgan's assessment that the pullback is overdone.
• It is recommended to closely monitor Chewy's active customer growth figures, developments in market share relative to competitors, and progress towards the projected 5.5% adjusted EBITDA margin in fiscal 2025, as these are key catalysts highlighted by analysts.
• Consider the potential for Chewy to outperform its current full-year revenue guidance, as the company has indicated it is tracking towards the upper half of its range and analysts widely expect strong performance, which could serve as a positive catalyst.
• Evaluate the forward-looking valuation, such as JPMorgan's price target basis of approximately 24 times 2026 estimated adjusted EBITDA, in the context of sustained growth expectations and ongoing profitability improvements when assessing long-term return potential.