Jefferies Downgrades Chewy (CHWY) to Hold, Flags Valuation Concerns

On June 5, Jefferies downgraded Chewy, Inc. (NYSE:CHWY) to Hold from Buy, highlighting concerns over valuation. Despite that, the price target was raised to $43 from $41, and the analysts observed that Chewy’s stock has surged 41% year-to-date.

A close-up shot of a store shelf stocked with pet food and supplies.

The analysts had reservations about Chewy’s capacity to outperform Street estimates in the upcoming Q1 results, to be released on June 11. Jefferies observed that Chewy, Inc. (NYSE:CHWY) is seeing gains from sponsored ads and data-driven insights from its website and mobile application. However, the analysts believe that the current share price has already factored in these positive developments, which can temper potential gains outside of management’s projected guidance.

The downgrade happened because of Chewy’s valuation, as analysts see limited scope for price appreciation. Jefferies maintains a conservative stance regarding the company’s future performance.

Chewy, Inc. (NYSE:CHWY) is an online American pet retailer that sells pet food, supplies, medications, and services through its website and mobile app.

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