Research firm Wedbush Securities kicked off its coverage of online pet food and supplies retailer Chewy.com (CHWY) on Friday with a less-than-enthusiastic neutral rating amid concerns over the company's stock-price valuation relative to profit potential.

Wedbush analyst Seth Basham initiated coverage on Chewy.com with a neutral rating and a $30 price target, noting in a research note to clients that while he sees potential for Chewy to top its near-term revenue forecasts, he sees the shares at current levels as still being overvalued.

Want to take bring your pup into the office on Take Your Dog To Work Week? Here's how: https://t.co/slc4Sgesj2 pic.twitter.com/57Ri9BEaiK

— Chewy (@Chewy) June 18, 2019

Basham, who also noted that he is waiting for a better entry point to raise his rating and price target, said he currently sees the stock being worth closer to $29 a share, including $3 for longer-term international growth.

Pets.com's Sock Puppet hit the big-leagues in the dot-com era with appearances in the Macy's Thanksgiving Parade, his own 2000 Super Bowl ad and a live interview on Good Morning America.
Pets.com's Sock Puppet hit the big-leagues in the dot-com era with appearances in the Macy's Thanksgiving Parade, his own 2000 Super Bowl ad and a live interview on Good Morning America.

Vaguely reminiscent of pet supplies online retailer Pets.com's late-1990s IPO, shares of Chewy.com jumped nearly 60% in their first day of trading, giving the company a valuation of $8.77 billion. 

However, that's where the similarities end, according to Real Money contributor Timothy Collins.

"You'll likely see a surge in references to the infamous dot.com flop Pets.com that basically marked the top of that era," Collins wrote in a recent RealMoney Pro column on Chewy.com. "The comparisons are fun for nostalgia, but that's where it ends.

"There's a lot to like about a retail business growing sales at 68% while in the billions," as well as earnings before income, taxes, depreciation and amortization (EBITDA) margins that are "significantly improving," he said.

Shares of Chewy.com were down 4.32% to $32.75 in trading on Friday.