Shares of Chewy Inc. (NYSE:CHWY) moved up 3.5% on Tuesday after TD Cowen analyst William Kerr reiterated a Buy recommendation and kept a $34.00 price target on the pet products retailer.
In his note, Kerr identified Chewy as TD Cowen's Best Smidcap Idea for 2026. He pointed to a mix of growth and margin-oriented initiatives that the firm believes give Chewy a favorable strategic position going forward.
The initiatives cited by Kerr that underpin TD Cowen's view include:
- CVC and Modern Animal
- Advertising
- Automation
- Chewy+
- Generative AI
Kerr highlighted valuation as a factor supporting the recommendation, noting that Chewy's shares appear attractive at current levels. The stock was referenced as trading at about 6.3x EV/EBITDA while TD Cowen models an expected 15% EBITDA compound annual growth rate over the next five years.
TD Cowen's endorsement underscores the firm's expectation that the combination of the listed initiatives will contribute to both top-line growth and margin expansion for the pet products retailer. The analyst's view ties near-term market movement to the reaffirmed rating and the retained price objective.
Market participants reacted to the note with the reported intraday gain, reflecting investor attention to sell-side guidance and the valuation metrics cited. The commentary from TD Cowen frames Chewy's strategic priorities as central to its thesis for continued operational improvement and shareholder value creation.
Beyond the immediate market response, the firm-level designation of Chewy as a top smidcap idea for 2026 places emphasis on the company's roadmap for product, technology, and margin initiatives as drivers of future performance. The analyst's projection of a 15% EBITDA CAGR over five years is presented alongside the current EV/EBITDA multiple to illustrate the firm's valuation case.
Note: The information in this report reflects the analyst commentary and market reaction described above.