Chewy Stock Gets Boost After Analyst Upgrade

CHWY could clear its 50-day moving average for the first time since April

Digital Content Manager
Jun 21, 2022 at 10:17 AM
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The shares of Chewy Inc (NYSE:CHWY) were last seen up 13.3% at $32.52, following an upgrade from Wedbush to "outperform" from "neutral." The analyst also lifted its price target to $35 from $30, citing "little downside risk," thanks to the company's spending and customer retention.

Prior to today's analyst coverage, the brokerage bunch was split on CHWY, with nine saying "buy" or better, and eight saying "hold." Meanwhile, the 12-month consensus price target of $43.76 is a 38.8% premium to current levels. 

The pandemic darling lost 59.3% in the past 12 months, and is now far off its Feb. 16, 2021 all-time high of $120. The company's quarterly earnings earlier this month were well-received, which helped send CHWY off a two-year low, though this rally lost steam near the 50-day moving average shortly after. Today, however, the security could close above this trendline for the first time since early April, should these gains hold. 

Options traders have been bearish, and a shift in sentiment could put some wind at CHWY's back. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity sports a 10-day put/call volume ratio of 1.12, which stands higher than 79% of readings from the past year. In other words, these traders are picking up puts at a quicker-than-usual clip. 

A short squeeze could also induce tailwinds. Short interest dropped 8.7% in the last two reporting periods, but still makes up 23.8% of the stock's available float, or over three days' worth of pent-up buying power. 

 

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