Wedbush analysts provided their views on Chewy, Inc. (NYSE:CHWY). While the company may be appealing to investors in a weakening macro environment given that it primarily sells consumables, the analysts stay sidelined, reiterating their neutral rating and $35 price target, after revisiting their customer retention and spending forecasts that point to modest downside risk to the Street estimates.

While noting that expectations are now far more tempered following back-to-back quarterly net active customer declines, the analysts believe current consensus net adds estimates are still too high for 2023.

According to the analysts, customer growth has been limited by two principal factors: (1) lower retention rates from the outsized pandemic cohorts that are trending low-single-digit percentage lower than pre-pandemic cohort averages and (2) a challenging customer acquisition environment.