Chewy's Modern Animal Acquisition Strengthens Pet Healthcare Platform
Chewy, Inc.CHWY is accelerating its push into pet healthcare through the acquisition of Modern Animal, a technology-enabled veterinary care provider. The deal strengthens Chewy’s presence in the highly attractive and underpenetrated pet healthcare market while supporting its broader strategy of building a comprehensive ecosystem that spans products, pharmacy and veterinary services. Management believes that the company is well-positioned to capitalize on this opportunity as demand for pet healthcare continues to grow.
A key advantage for Chewy is its growing access to veterinary talent in an industry facing a shortage of veterinarians. Management noted that this creates a structural advantage as the company expands its Chewy Vet Care network. Modern Animal adds a highly complementary platform with strong clinical expertise, above-industry unit economics and an experience-led, technology-enabled model that aligns closely with Chewy’s veterinary strategy.
The acquisition is expected to accelerate clinic expansion by combining Chewy Vet Care’s organic growth initiatives with Modern Animal’s existing footprint and development pipeline. Together, the businesses are expected to operate 60 clinics by the end of fiscal 2026, with embedded revenue contribution approaching $290 million at steady state.
Chewy has also incorporated the acquisition into its fiscal 2026 outlook. The company expects net sales of $13.40-$13.55 billion, indicating year-over-year growth of 6.3-7.5%. The guidance includes an estimated $70-million revenue contribution from Modern Animal during fiscal 2026.
While Modern Animal’s clinics generate attractive mature four-wall profitability, management expects the business to create a modest margin-rate drag during 2026 as integration efforts progress. Even so, Chewy maintained confidence in its earnings model and plans to open 10-12 Chewy Vet Care locations this year while integrating Modern Animal into its operating and technology platforms.
CHWY’s Price Performance, Valuation & Estimates
Chewy, which competes with BARK, Inc. BARK and Petco Health and Wellness Company, Inc.WOOF, has fallen 22.8% in the past three months against the industry’s growth of 10%. Meanwhile, BARK shares have declined 20.4% and Petco has dipped 9.3%.
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From a valuation standpoint, CHWY trades at a trailing price-to-sales ratio of 0.59X, below the industry’s average of 2.20X. It has a Value Score of A. CHWY is trading at a premium to BARK (with a trailing 12-month P/S ratio of 0.22) and Petco (0.12).
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The Zacks Consensus Estimate for CHWY’s fiscal 2026 and 2027 earnings implies year-over-year growth of 20.5% and 22.2%, respectively. Estimates for fiscal 2026 and 2027 have been revised downward by 10 cents and 13 cents, respectively, in the past 30 days.
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CHWY currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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