Why Is Chewy Stock Falling, and is it a Buying Opportunity? | CHWY Stock Analysis

AI-generated source summary

Chewy's fiscal year 2026 sales outlook has been lowered to a range of $13.4 billion to $13.55 billion, down from previous guidance. This adjustment reflects challenging market conditions, including high inflation and increased costs due to tariffs and rising oil prices, which have reduced consumer discretionary spending. First-quarter net sales increased by 7.7% year-over-year to $3.36 billion, with a gross margin of 30.1%. The company also announced the acquisition of SmartEquine to expand its health offerings. Multiple analysts have downgraded price targets for Chewy, citing caution about the company's outlook. Despite these headwinds, the management team is seen as effectively navigating the business, as evidenced by the improvement in operating profit margins and the cash flow to sales ratio, which increased from -3.8% in 2017 to 2% in 2025. The stock's valuation, at a forward P/E of 12.1 and a forward price-to-cash-flow ratio of 9.3, suggests it is trading below its intrinsic value, estimated at $34 by a discounted cash flow model. The stock is currently trading near its 52-week low of $18.22, making it attractive for long-term investors.

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