Who’s a good boy? According to Goldman Sachs analyst Eric Sheridan and his team, one of the goodest of good boys around is Chewy (NYSE:CHWY), the pet goods retailer with an online focus. Sufficiently good, in fact, to bump the rating up from “neutral” to Buy thanks to a series of improving metrics.
The word from Goldman Sachs notes that Chewy’s ability to maintain its growth rate—over 10% on the topline—is likely to continue through 2027. Growth is stabilizing; while Chewy enjoyed a nice surge during the pandemic years, there are sufficient numbers of customers sticking around to keep Chewy alive and thriving. Moreover, there are improvements coming out of some new strategies. Chewy has been working hard to expand internationally, modify its marketing, and even branch out into new product lines like insurance.
With a glowing skein of recommendation like that, what’s keeping Chewy stock from climbing a lot harder than its fractional gains in Monday afternoon’s trading? In fact, Chewy was briefly down in the morning trading. Part of that may be connected to Sheridan et al; Sheridan noted that the upgrade reflects “…our preference for platforms with greater exposure to less discretionary categories, and that can lean on large ecosystems of buyers and subscribers…” That may have scared some off who were looking for faster gains, as such a strategy is a recession-fighter, not a recipe for explosive upside.
At any rate, analyst consensus is, mostly, with Sheridan. With 12 Buy ratings, seven Hold and one Sell, Chewy stock is considered a Moderate Buy. Further, with an average price target of $44.16, Chewy stock offers its investors a 16% upside potential.
