Jefferies Downgrades Chewy Stock (CHWY) While Most Analysts Stay Bullish Ahead of Q1 Earnings

Pet supplies retailer Chewy (CHWY) is scheduled to announce its results for the first quarter of Fiscal 2025 before the market opens on Wednesday, June 11. Today, Jefferies analyst Kaumil Gajrawala downgraded Chewy stock from Buy to Hold but raised the price target to $43 from $41 on valuation concerns.

Wall Street expects Chewy to report Q1 FY25 EPS (earnings per share) of $0.17, reflecting more than 13% year-over-year growth. Meanwhile, revenue is expected to increase by about 7% to $3.08 billion.

Jefferies Moves to the Sidelines on Chewy Stock

Gajrawala noted that CHWY stock has rallied 41% year-to-date and trades at 24x 2026 EBITDA (earnings before interest, tax, depreciation, and amortization). He contends that while the stock’s valuation is “primed for a beat and raise,” he thinks it’s unlikely to happen for Q1.

The analyst acknowledged that the pet macro backdrop looks relatively stable, and Chewy is performing well. However, Gajrawala feels that CHWY stock already reflects positives, including sponsored ads and alternative data from its web and app platforms, and the ongoing CFO change. Consequently, he sees limited upside beyond the high-end of the company’s guidance.

Other Analysts’ Views on Chewy Stock

Heading into Q1 results, Bank of America analyst Curtis Nagle increased the price target for Chewy stock to $49 from $44 and reaffirmed a Buy rating. The analyst noted that Bank of America’s revenue estimate of $3.09 billion indicates 7.4% year-over-year growth. He added that the firm’s EBITDA estimate of $182 million is 4% below the Street’s estimate at $190 million due to higher advertising spend, as Chewy is relying on marketing investments while the industry recovers.

Nagle added, “Investments seem well founded, with CFO Reeder noting increases in gross adds & reactivations, while churn is declining.” He expects Q1 FY25 active customer count to increase by 3.2% year-over-year to 20.6 million, in line with the Street’s estimate. Nagle said that he would not be surprised to see upside to the net additions estimate, driven by ad investments and app strength, as was seen in the fiscal fourth quarter.  

Meanwhile, Barclays analyst Trevor Young increased the price target for CHWY stock to $50 from $44 and reaffirmed a Buy rating. The 4-star analyst expects Chewy’s Q1 FY25 revenue and EBITDA to exceed expectations and the company to issue a market-beating Q2 outlook, while retaining Fiscal 2025 revenue guidance due to macro uncertainty. While the company’s “gross margin progression may be noisy lapping one-time items last year,” Young sees more upside in the stock.

Is Chewy a Good Stock to Buy?

Overall, Wall Street has a Strong Buy consensus rating on Chewy stock based on 19 Buys and five Hold recommendations (prior to Jefferies’ downgrade). Given the solid year-to-date rally, the average CHWY stock price target of $41.74 implies about 11.7% downside risk for current levels.

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