Analysts Dish Out Ratings on Chewy Stock

Jefferies says its waiting for a better entry point

by Patrick Martin

Published on Jul 9, 2019 at 10:04 AM

Even after online pet supplies retailer Chewy Inc (NYSE:CHWY) logged an eye-opening trading debut on June 14, industry standards require analysts from underwriting firms to wait 25 days until initiating coverage. That quiet period is now over, and a host of analysts have already come forward with ratings.

No fewer than nine brokerages initiated coverage on CHWY this morning, with a wide range of opinions. Among the bulls are J.P. Morgan Securities and UBS, which doled out the equivalent of a "buy" rating and a $42 price target. The latter waxed optimistic about the pet industry, and views Chewy as a premium to online retailer peers given "its highly visible and recurring revenue stream." William Blair also started coverage with an "outperform" rating.

Some analysts were more skeptical, with Raymond James chiming in with a "market perform" rating. Instinet, RBC, Morgan Stanley, and Jefferies also started off with their versions of a "hold" rating and price targets ranging from $33 to $37. Jefferies, in a note titled "Keep This One In The Kennel," warned of competition from large retail entities like Amazon (AMZN) and Walmart (WMT), and said it will "wait for a better entry point."

At last check, CHWY is trading down 3.7% at $33.14. On the charts, Chewy stock's record high of $41.34 on its debut day has been hard to top. The shares quickly pivoted to an all-time low of $30.80 on June 25, but are still well above their initial public offering price of $22.

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