What happened

Many investors weren't eager to chew on shares of Chewy (CHWY -0.18%) Wednesday. Following an uninspiring new analyst note, they traded out of the pet products specialist, sending its share price down by more than 1%, against the 0.2% slump of the S&P 500 index. 

So what

That note, an update on leading e-commerce stocks, was written by Wolfe Research analyst Deepak Mathivanan. In his research, Mathivanan generally lowered his expectations for e-commerce titles due to the latest consumer trends.

The analyst cited major factors behind his reasoning. First, he believes that due to high penetration that exceeds 20% in numerous Western markets, growth will start to slow. Second, in his view, revenue growth for e-commerce companies in 2022 was due in part to inflation, and current consensus estimates for such operators are unrealistically high.

Despite his gloomier view, Mathivanan remained bullish on some of the sector's top names. Chewy, however, wasn't one of them. Of that stock and e-commerce facilitator Shopify, he wrote that the recent "relief rally" in these companies "pushed me toward stepping to the sidelines" with that pair of titles.

Now what

Mathivanan might not be so hot on Chewy, but he continues to believe that other titles in the space still offer value. He reiterated his outperform (buy) recommendations on sector leaders Amazon and MercadoLibre, on the back of relatively strong fundamentals and attractive valuations. He's also maintaining his outperform recommendation on eBay, which in his mind still trades at a "highly discounted valuation."