Argus cuts Chewy to Hold on valuation

As previously reported, Argus analyst Kristina Ruggeri downgraded Chewy to Hold from Buy with no price target. The stock is up 48% over the past quarter compared to flat results for the Russell 2000 index, and its trading volume and volatility should increase due to a shift in stock ownership, the analyst tells investors in a research note. Longer term, Argus has a positive view of Chewy’s focus on nondiscretionary pet products and services, which represent about 85% of revenue, and the company is piloting Vet Care Clinics this year – another high margin service that could provide downstream benefits for the company’s pet pharmacy, specialty foods/supplements and health insurance categories, though in the near term, the company continues to see declines in its active customer list amid weak economic conditions, Argus added.