A severe pullback in Chewy has resulted in an attractive entry point for investors, according to Raymond James. The investment firm upgraded the pet services and products e-commerce provider to outperform from market perform. Analyst Rick Patel also set a $28 price target, which implies a 16% upside from Wednesday’s close. Shares of Chewy have plunged 36% in the past 12 months and are down 27% this year. Patel noted the stock has stumbled 33% since its fiscal third-quarter earnings print, while the S & P 500 is flat in the same time. CHWY 1Y mountain CHWY 1Y chart Patel said this recent weakness has created an attractive risk-reward balance for shares of Chewy. “We like the setup of a low bar coupled with topline and margin opportunities in 2026,” he wrote. Patel pointed to a strong consumer heading into 2026 as an upside driver for Chewy, with robust demand continuing. He added that active customer growth has tailwinds due to organic growth, share gains from digital migration and a growing number of vet clinic practices. “We consider Chewy in the developmental stages of scaling Chewy Vet Clinics (CVC). This initiative unlocks $25B services segment of the $47B U.S. pet health market. About 40% of customers acquired from CVC are new to Chewy. And 50% of new customers make a purchase on Chewy.com within 30 days of their clinic visit, contributing to [net sales per active customer,” he said. Patel added that as of December, only 14 Chewy Vet Clinics existed. Chewy has planned two new additions this quarter, which would bring its total to eight to 10 new locations this fiscal year. Meanwhile, he expects Chewy’s revenue to increase if the company chooses to either raise its own prices or lean into value to gain market share. Patel also noted that Chewy is also primed to weather any downside risks. “While Chewy has compelling revenue drivers, it also has an attractive defensive positioning. Autoship customers (i.e., very sticky) reflected ~83% of revenue. Staples categories, including Consumables (food) and Healthcare, are ~90% of annual revenue,” he wrote. “We view this as protecting CHWY in a downside event.”
