Piper Sandler has reaffirmed an Overweight rating on Chewy Inc. and maintained a $48.00 price target, despite the online pet retailer’s pronounced share-price weakness this year. According to InvestingPro data, Chewy shares are down 19.6% year-to-date and have fallen 31.3% over the past 12 months, with the stock trading close to its 52-week low of $26.34.
The research team at Piper Sandler highlighted three primary explanations for the stock’s relative underperformance. First, investors are wary of the company’s guidance for 2026. Second, there are lingering questions about pet ownership trends after Tractor Supply Company’s latest earnings report. Third, the continued ownership by BC Partners remains an overhang - the private-equity firm has reduced its stake but still holds about 42% of Chewy.
Market technicals add another dimension to the debate. InvestingPro Tips flag the stock’s Relative Strength Index as indicative of oversold conditions, a signal some contrarian investors might interpret as a potential buying opportunity if they are prepared to look past current headwinds.
Piper Sandler further observed that Chewy’s 2025 earnings trajectory appears more in line with consensus than the outsized beats the company delivered previously. On a year-to-date basis, Chewy posted an EBITDA beat of about 3%, versus an average beat of 22% in 2024.
Given that backdrop, the firm expects Chewy to take a conservative stance when issuing guidance for 2026. Piper Sandler suggested that management may set modest targets initially, creating scope to deliver upside through the year by beating expectations and then raising guidance as operational fundamentals hold up.
For 2026 specifically, Piper Sandler projects Chewy will guide to 7-8% sales growth, slightly below the Street’s 8% expectation. The firm also expects management to bracket the consensus 6.6% EBITDA margin, while noting there is potential upside should Chewy achieve improved operating leverage.
Recent company results provide a mixed but generally positive signal. Chewy reported third-quarter figures that topped consensus estimates for both revenue and EBITDA - by roughly 1% and 7%, respectively - and delivered 8.3% sales growth that exceeded both its own guidance and consensus projections.
Following the quarterly release, several brokerages adjusted their views. TD Cowen raised its price target to $48 and kept a Buy rating. UBS increased its target to $42 while assigning a Neutral rating. Mizuho reiterated an Outperform rating with a $50 price target, citing encouraging CEO remarks on fourth-quarter customer additions and better profitability outlook for the coming year. Needham remained on Hold, citing concerns that fourth-quarter margins could weigh on adjusted EBITDA estimates.
On the leadership front, Chewy announced that its chief technology officer, Satish Mehta, will retire in February 2026 and that the company is searching for his successor. The firm framed these items as part of ongoing efforts to strengthen its market position and financial performance.