Analysts expect shares of pet supplies retailer Chewy to rise by 50%. Why?

Shares of Chewy, an online pet supplies retailer, have been named among the most attractive stocks for investment by hedge fund Two Sigma, according to the investment portal Insider Monkey. Wall Street is optimistic about Chewy: even though its stock has fallen 37% since the start of the year, analysts believe it could rise 50% from its current price.

Two Sigma, one of the world’s largest quantitative hedge funds, has added Chewy stock to its list of top picks, alongside Nvidia and Hewlett Packard, according to Insider Monkey. The investment portal’s list includes Two Sigma’s largest holdings for the first quarter of 2026, with growth potential of 50% based on Wall Street analysts’ consensus forecasts. Two Sigma manages more than $70 billion in assets and uses AI and algorithmic models for its investments.

Chewy's stock has lost nearly 38% of its value since the start of the year. In its first-quarter 2026 earnings report, Chewy lowered its revenue forecast for 2026 to $13.4–$13.55 billion from its previous forecast of $13.6–$13.75 billion — amid expectations of more subdued consumer demand. Analysts surveyed by FactSet had expected $13.65 billion, according to The Wall Street Journal.

Chewy revised its forecast despite growth in key metrics. Quarterly revenue increased 7.7% year-over-year to $3.36 billion, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 31.3% to $253.1 million, and the number of active customers rose 3.6% to 21.5 million. One of the company’s key business segments is its subscription-based regular delivery service, which provides stable revenue. In the first quarter, subscription sales grew 10.5% year-over-year to $2.83 billion, accounting for 84.4% of the company’s total revenue.

This year, the company expanded its network of in-house veterinary clinics, CVC (Chewy’s Vet Care), by closing a deal in May to acquire the Modern Animal network—comprising 29 clinics and a digital veterinary platform—for $400 million. Late last year, Chewy acquired SmartEquine, a digital platform for horse owners. By the end of 2026, Chewy plans to increase the number of its clinics to 60.

BNP Paribas Securities Corp. analyst Chris Bottiglieri wrote in a report (available on Oninvest) that one of the factors putting pressure on the stock is declining demand for premium goods and competition from major players. However, in late June, BofA Securities analyst Michael McGovern, following a call with Chewy’s management, expressed confidence in the company’s prospects despite weak sales and rising fuel costs (the report is available on Oninvest). McGovern considers Chewy’s strengths to be the development of its veterinary business, the expansion of its fresh and frozen pet food segment, and cost savings achieved through the use of AI. BofA Securities reaffirmed its “Buy” rating and $31 price target. This is approximately 50% higher than the stock’s closing price on July 8.

In a June 23 report (available on Oninvest), analysts at TD Cowen noted that the market is undervaluing Chewy’s stock—given the company’s expected growth rates. TD Cowen named the company’s stock the top investment idea among small- and mid-cap stocks for 2026 and highlighted its attractiveness at current levels. Furthermore, according to the analysts, the share of online sales of pet products in the total market will continue to grow. And Chewy has a good chance of attracting customers away from its brick-and-mortar competitors. TD Cowen reaffirmed its “Buy” rating and $34 price target.

According to MarketWatch, of the 31 analysts covering the company, 24 recommend buying the stock (20 “buy” ratings and four “overweight” ratings), while seven recommend holding. There are no sell recommendations. The average price target is $30.82, which is 50% higher than the current market price.