What Happened?
Shares of e-commerce pet food and supplies retailer Chewy (NYSE: CHWY) jumped 3.2% in the afternoon session after Evercore ISI reiterated its "Outperform" rating on the stock with a $52 price target.
The investment firm cited several positive factors, including a stabilization in the U.S. pet industry following a two-year decline. Evercore highlighted Chewy's position as a clear online leader in the sector, supported by its economically resilient, subscription-based model, where "Autoship" services account for 80% of revenue. Looking ahead, the firm sees a path for Chewy to expand its gross margins through growth in pet health products, private label brands, and advertising revenue.
Evercore also anticipates improvements in EBITDA margins and free cash flow generation, which it believes could lead to better valuation and potential capital returns for shareholders. The $52 price target represents a potential 31% upside from the stock's current levels.
After the initial pop the shares cooled down to $40.80, up 2.7% from previous close.
Is now the time to buy Chewy? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Chewy’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock gained 7.8% on the news that markets continued to rally as the latest inflation data reinforced expectations for a Federal Reserve rate cut as soon as September.
The latest Consumer Price Index (CPI) report for July showed inflation holding steady, reinforcing market expectations that the Federal Reserve could begin cutting interest rates as soon as September. Lower interest rates generally stimulate the economy by making borrowing cheaper for consumers and businesses. This can lead to increased consumer spending and e-commerce activity, which directly benefits online retail and marketplace companies. The positive economic outlook fueled a broad-based rally, pushing the S&P 500 and Nasdaq to new record highs and lifting most growth-oriented technology stocks.
Chewy is up 20.5% since the beginning of the year, but at $40.80 per share, it is still trading 15.4% below its 52-week high of $48.21 from June 2025. Investors who bought $1,000 worth of Chewy’s shares 5 years ago would now be looking at an investment worth $700.15.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
