Why Chewy Stock Was Climbing Higher This Week

Core Viewpoint - Chewy's stock is experiencing a positive trend following favorable analyst reports and a better-than-expected earnings report, indicating a potential recovery in the pet e-commerce sector after a downturn post-pandemic [1][2][4]. Group 1: Analyst Sentiment - Several Wall Street analysts have issued bullish notes on Chewy, contributing to a 16.6% increase in stock price after the company's second-quarter earnings report [1]. - Goldman Sachs reiterated a buy rating with a price target of $35, citing improvements in active customer trends and internal initiatives expected to drive revenue growth [3]. - Morgan Stanley noted an increased probability of Chewy's stock doubling due to improved profit margins, while Barclays expressed optimism after meeting with management, highlighting revenue growth and margin expansion [4]. Group 2: Financial Performance - Chewy's revenue rose by 2.6% in the second quarter, but adjusted EBITDA surged by 155%, indicating strong profit performance despite sluggish revenue growth [5]. - The company needs to accelerate revenue growth to sustain the upward momentum in stock price [5]. Group 3: Industry Context - The pet sector, including Chewy, is showing signs of recovery after a significant downturn following the pandemic-driven boom in pet adoptions [2][4]. - Rival Petco has also seen stock gains due to a newly introduced turnaround plan, suggesting a broader recovery trend among pet stocks [4].