Chewy, Inc. (NYSE:CHWY) is one of the best stocks to invest in according to Two Sigma Advisors with huge upside potential. On June 23, TD Cowen ***** yst William Kerr named Chewy, Inc. (NYSE:CHWY) as the firm's best small- and mid-cap, or Smid-cap, stock idea for 2026, and at the same time reiterated a Buy rating and a $34 price target on the shares.
Kerr said his firm's endorsement was built around several growth and margin levers it believes Chewy has not yet fully monetized. These include its veterinary care partnership through CVC and Modern Animal, an expanding advertising business, ongoing automation of its fulfillment operations, the Chewy+ membership program, and the integration of generative AI into its platform.
Kerr added that at the time of the note, Chewy was trading at just 6.3 times its enterprise value-to-EBITDA. He described this valuation as attractive given the company's expected EBITDA compound annual growth rate of 15% over the next five years. Put simply, the ***** yst believes the stock is too cheap relative to how fast the business is expected to grow.
The ***** yst also pointed out that as online shopping for pet products continues to grow as a share of total industry sales, Chewy is well positioned to pull customers away from physical competitors. The competitors include local pet stores, traditional retailers, and grocery chains.
The Smid-cap designation places Chewy in a curated list of TD Cowen's top investment picks for companies with a market capitalization generally below $10 billion. This is the firm's annual selection that signals its highest-conviction ideas in that size category.
Kerr said his firm's endorsement was built around several growth and margin levers it believes Chewy has not yet fully monetized. These include its veterinary care partnership through CVC and Modern Animal, an expanding advertising business, ongoing automation of its fulfillment operations, the Chewy+ membership program, and the integration of generative AI into its platform.
Kerr added that at the time of the note, Chewy was trading at just 6.3 times its enterprise value-to-EBITDA. He described this valuation as attractive given the company's expected EBITDA compound annual growth rate of 15% over the next five years. Put simply, the ***** yst believes the stock is too cheap relative to how fast the business is expected to grow.
The ***** yst also pointed out that as online shopping for pet products continues to grow as a share of total industry sales, Chewy is well positioned to pull customers away from physical competitors. The competitors include local pet stores, traditional retailers, and grocery chains.
The Smid-cap designation places Chewy in a curated list of TD Cowen's top investment picks for companies with a market capitalization generally below $10 billion. This is the firm's annual selection that signals its highest-conviction ideas in that size category.
3 months ago
