Chewy Inc. Shows Promising Growth Potential, Analysts Predict 50% Upside
Chewy’s Transformation Amid Market Trends
Chewy Inc. (CHWY), the well-known online retailer of pet products, is gaining attention from analysts as it positions itself for strong performance in 2025. After experiencing a notable surge in interest from retail investors and being categorized as a “meme stock” in 2024, Chewy’s fundamentals are now being recognized for their robust growth potential. Mizuho Securities has upgraded Chewy’s stock rating to “outperform,” emphasizing that the company is “entering beast mode for 2025.”
Mizuho analyst David Bellinger stated in a note released on Monday that Chewy’s current trajectory is impressive, particularly as spending in the pet industry is anticipated to rebound strongly. He believes that near-term worries regarding increased advertising expenditures are shortsighted, especially since Chewy remains well within its historical return on investment (ROI) thresholds. Bellinger pointed out that the company has multiple internal levers that can help expand its EBITDA (earnings before interest, taxes, depreciation, and amortization) margins towards a high-single-digit to double-digit percentage rate.
Targets and Strategic Moves
The firm set a base-case price target of $42 and a bullish target of $54 for Chewy, suggesting that a significant upside of over 50% could be on the horizon. Mizuho’s bull case presents optimistic growth metrics, projecting that active customer growth will accelerate beyond the current low-single-digit growth rate and revenue growth could soon approach double-digit percentages due to modest inflation.
The extensive potential for Chewy is attributed not only to a rebound in pet spending but also to the company’s unique opportunity to expand its under-penetrated mobile application. In addition to this, Chewy’s focus on veterinary initiatives represents another strategic avenue for growth that could attract more customers and increase sales.
Recognition from Other Analysts
Moreover, Chewy’s positive outlook has not gone unnoticed by other market analysts. Wolfe Research has also upgraded Chewy to “outperform,” emphasizing that the company’s growth potential remains undervalued in the market. Analyst Shweta Khajuria has pointed out that Chewy possesses numerous product catalysts and international expansion opportunities. She anticipates improved customer growth, especially as the company gears up for acceleration in 2025 and 2026.
Khajuria confidently expressed beliefs that Chewy’s net sales per active customer (NSPAC) will remain robust, pushing the company further toward margin expansion due to implemented operational efficiencies. She said, “All of these initiatives, plus operational efficiency gains, should help drive more meaningful margin expansion.” This sentiment echoes the general anticipation that Chewy’s ability to increase its NSPAC is not being fully appreciated by the market.
Recent Performance and Market Reaction
Chewy’s positive sentiments are substantiated by its recent third-quarter results, where the company surpassed sales expectations and noted an uptick in active customer numbers. The company’s stock has seen a remarkable appreciation of approximately 79.2% over the past year, along with a modest increase of 10.7% early in 2025. This performance significantly outpaces the S&P 500 index, which rose 25.4% in the past year and has had a mere 1.6% gain in 2025 so far.
The changing narrative around Chewy reflects its shift away from the meme-stock label that defined much of its 2024 journey. Thanks to a focus on solidifying its business fundamentals and addressing investor concerns, Chewy is carving out a path that could lead to sustained growth and investor confidence.
The Path Forward
As Chewy positions itself to navigate the future, the anticipated growth in the pet product industry combined with its innovative strategies will likely set the stage for significant performance. Investors and market watchers will be keenly observing how Chewy leverages its operational efficiencies and product advancements to solidify its standing in the competitive e-commerce landscape.
In conclusion, with Chewy being characterized as a top pick within the consumer internet vertical and gaining upgrades from multiple analyst firms, it stands poised for exciting developments ahead. Whether Chewy can meet these bullish predictions will unfold in the coming months, making it a compelling story for both seasoned and novice investors alike.
