Following PetSmart’s “pricey acquisition” of online pet supplies retailer Chewy.com yesterday for an estimated $3.35B, Wedbush analyst Seth Basham argued that Wayfair (W) could be the next takeover target in online commerce. Among the possible suitors, the analyst sees Wal-Mart (WMT) and Amazon.com (AMZN) among several others.

PURE PLAY M&A POSITIVE FOR WAYFAIR: In a research note to investors this morning, Wedbush’s Basham noted that PetSmart’s acquisition of online pet supplies retailer Chewy.com could mark a turning point in hardlines specialty brick-and-mortar retailers’ attitudes toward online pure plays. Retailers may be coming to the realization that the online pure plays are tough to beat competing head-on and investors may now be more willing to support major acquisitions to turn the tide, the analyst contended. Basham pointed out that while Wal-Mart may have started a trend of major online pure play acquisitions with its Jet.com deal last year, the Chewy acquisition by PetSmart seems to be an extension of that same trend. Further, he believes Wayfair is “one of the most ripe” acquisition targets, currently trading well below recent transaction multiples, and sees Bed Bath & Beyond (BBBY), Target (TGT), Wal-Mart, Home Depot (HD), Lowe’s (LOW), Amazon.com and Steinhoff among potential acquirers of Wayfair. The analyst reiterated an Outperform rating on Wayfair’s shares.

READ-THROUGH TO HARDLINES: PetSmart’s acquisition of online pet supplies retailer Chewy.com may have a limited direct read-through to other categories, but the increasing acceptance of online shopping means that no category is truly immune from this threat, Basham argued. The analyst pointed out that the “overhang” from this threat for AutoZone (AZO), O’Reilly Auto (ORLY) and Advance Auto Parts (AAP) in the auto parts retail category is unlikely to disappear. On the other hand, he pointed out that retailers who many have discarded as secular decliners may find support in reinventing themselves through major online acquisitions.