Raymond James Upgrades Chewy, Sets $28 Target on 8x EV/EBITDA
Raymond James upgraded Chewy to Outperform from Market Perform after its shares fell 33% post fiscal third-quarter results. It sees Chewy at 8x EV/2027 EBITDA versus a 22x three-year average, sets a $28 target on a 10x multiple and forecasts 7% revenue growth with 80bps margin expansion.
1. Upgrade to Outperform
Raymond James raised Chewy’s rating from Market Perform to Outperform after shares fell 33% since its fiscal third-quarter results, highlighting a potential valuation reset.
2. Valuation Rationale
Chewy trades at about 8x enterprise value to 2027 EBITDA versus a three-year average of 22x, leading Raymond James to set a $28 price target on a 10x multiple for 2027 estimates.
3. Fiscal 2026 Outlook
The firm forecasts roughly 7% revenue growth in fiscal 2026 alongside an 80 basis-point expansion in EBITDA margin to 6.5%, as investment drag from a 53rd week moderates.
4. Growth and Margin Drivers
Analysts expect pet household formation to support active customer growth, pricing flexibility from 1%–2% industry price rises, and margin gains from operating leverage as elevated investments ease.