** Shares of online pet products retailer Chewy CHWY.N down 2.7% to $46 premarket

** Brokerage Jefferies downgrades Chewy to "hold" from "buy" due to valuation concerns, with note titled "Valuation Gives Us Paws," citing stock is "primed for a beat and raise" but has limited upside

** Says stock's price is a concern as it's trading at high valuation that's "8 turns higher than March" and above its normal range, making it hard to justify further price increases

** Jefferies says current valuation already assumes beat-and-raise guidance in Q1, which brokerage thinks is "unlikely"

** Pet market is "relatively stable", but spending is only up 3.5% in April, as economic uncertainty affects consumer behavior, limiting co's potential for big gains - brokerage

** However, Jefferies ups CHWY's PT by $2 to $43, which is 9% downside to the stock's Wednesday close

** As of last close, stock up 41.2% YTD

(Reporting by Kamal Choudhury in Bengaluru)

((Kamal.Choudhury@thomsonreuters.com;))