UBS adjusted its price target for Chewy (NYSE: CHWY) from $32 to $24, citing broader economic pressures while acknowledging the company’s 7.7% sales growth and stronger profitability in its latest quarter.

Key Highlights

  • UBS lowered Chewy’s price target to $24 from $32, maintaining a neutral rating.
  • Gross margin expanded by 50 basis points to 30.1%, while adjusted EBITDA rose to $253.1 million, up $60.4 million year-over-year.
  • Autoship subscriptions, which generate 70% of revenue, remain a key driver of recurring sales across over 3,500 brands.

Earnings Overview

Chewy (NYSE: CHWY) released its fiscal first-quarter results, showing steady growth in a competitive pet e-commerce landscape. This performance reflects ongoing demand for pet products, even as consumer spending faces broader economic pressures.

Margin and Profitability

The company demonstrated improved efficiency, with gross margin rising by 50 basis points to 30.1%. These figures indicate that Chewy is strengthening its financial position as it scales its operations.

Customer Growth

During the quarter, Chewy added nearly 200,000 net customers, reinforcing its ability to attract and retain shoppers. A significant portion of its revenue comes from its Autoship service, which accounts for 70% of sales. This subscription-based model provides pet owners with convenience while ensuring consistent revenue for the company.

Business Model Resilience

UBS analyst Michael Lasser noted that while Chewy has historically navigated economic downturns well, its growth trajectory may moderate as the business matures. The shift from rapid expansion to a more stable phase could influence investor expectations, particularly in an environment where discretionary spending remains under scrutiny.

Valuation Adjustment

On June 11, 2026, UBS revised its price target for Chewy to $24 from $32, keeping its neutral rating intact. The adjustment reflects a more conservative outlook, emphasizing the need for realistic projections in the second half of the fiscal year. The firm suggested that the stock may remain range-bound until clearer demand trends emerge.

Investor Insights

Investors should watch how Chewy sustains growth in its Autoship segment, as well as any shifts in consumer behavior that could impact the broader pet e-commerce sector. The revised price target underscores the importance of macroeconomic factors while recognizing the company’s ability to enhance profitability as it refines its business model. With over 3,500 brands in its catalog, Chewy remains a key player in the online pet retail space, though its valuation may face continued pressure amid evolving market conditions.

This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial adviser before making investment decisions.