Mizuho cuts Chewy stock price target on growth concerns

Mizuho cut its price target on Chewy Inc. (NYSE:CHWY) stock to $32 from $40, keeping its Outperform rating. The company's shares are currently trading at $23.96, down 27.5% year-to-date, indicating potential upside to the revised target. Mizuho adjusted its estimates prior to Chewy's expected second-quarter earnings report. The analyst believes an in-line performance might boost shares following the company's guidance reset several months ago.

Investors are closely watching top-line growth and potential strategies to reaccelerate revenue. Chewy's management is reportedly exploring methods to boost revenue growth and show the business is not becoming more vulnerable to competitive pressures, even if it means giving up some EBITDA margin expansion. Mizuho remains optimistic about Chewy's ongoing market share capture, strong cash generation, and increasing buybacks, all of which support its Outperform rating.

The price target reduction is in line with the firm's reassessment of the pet retailer's growth trajectory in the current competitive market. Chewy is preparing for its fiscal second-quarter earnings report on September 9. Analysts from BofA Securities and Piper Sandler have also maintained positive ratings and price targets for Chewy, citing factors such as pet industry spending acceleration and market share expansion through promotional offers.