Why Chewy Stock Topped the Market Today

While faint praise of a stock from a market professional usually doesn't move that title's price, the dynamic was different for Chewy (NYSE: CHWY) on Tuesday. A researcher initiated coverage of the pet products and services specialist with only the equivalent of a neutral recommendation. However, she waxed sufficiently bullish about the company to where investors pushed its stock price up by nearly 3% on the day.

Says the stock is only a neutral, but...

Well before market open, Wolfe Research's Shweta Khajuria launched coverage of Chewy with her company's version of a neutral tag, peerperform. Khajuria did not include a price target in her analysis.

In her inaugural Chewy note, the prognosticator wrote that she was somewhat doubtful about management's ability to grow both its revenue generally, and more specifically its number of active customers, an important client category. She also expressed concern that Chewy is selling into a market currently experiencing reduced pet take-up.

However, she mentioned several elements of the company's business that could be winners in the future. Khajuria said she was "encouraged" by potential growth drivers such as veterinary services, international sales, and private-label products. Even though she added that none will likely be a significant boon to Chewy's operations this year, reading between the lines, one or several could have solid potential further in the mid- to long term.

A cautious analyst among bulls

Khajuria might be somewhat of an outlier in the small universe of Chewy analysts. According to data compiled by Yahoo! Finance, on average they're expecting a nearly 6% bump in revenue this year over 2023 (to almost $11.8 billion), accompanied by a nearly threefold increase in per-share net income (to $0.26).

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chewy. The Motley Fool has a disclosure policy .