It’s an analyst favorite for a clutch of reasons.
Next-generation pet supplies specialist Chewy (CHWY 6.03%) was quite the flavorful stock to own on Tuesday. While there wasn’t any fresh news of consequence from the company itself, a new research note from a bullish analyst helped propel the shares higher. They closed the day up 6% in price, easily beating the 0.5% increase of the S&P 500 index.
Reiterating a solid buy recommendation
That analyst was Alexandra Steiger of white-shoe investment bank Goldman Sachs. She reiterated her buy recommendation on Chewy, and her price target of $35 per share, following a conversation with company management. That level is a robust 25% above the stock’s most recent closing price.
In Steiger’s latest note on the company, she wrote that management believes that a recent rise in active consumer trends is due to internal initiatives combined with a better environment in the pet care sector generally.
Additionally, Chewy should benefit from continued, albeit modest, growth in its active customer count. Finally, the analyst added that a focus on health products should help drive net sales per active customer (NSPAC; a crucial metric for the company).
Peers have similar perspectives
The Goldman Sachs prognosticator is not the only pundit either reiterating a positive view or becoming more bullish on Chewy. Last week, her peer Lauren Schenk of Morgan Stanley published a new note on the company’s prospects, in which she wrote that its “forward margin trajectory remains compelling and underestimated.” In Schenk’s view, the company could manage to post earnings before interest, taxes, depreciation, and amortization (EBITDA) of $750 million across all of 2025.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chewy and Goldman Sachs Group. The Motley Fool has a disclosure policy.
