Wolfe Research upgraded Chewy stock to "outperform" from "peer perform"
Chewy Inc (NYSE:CHWY) stock is 1.1% higher in pre-market trading, following a bull note at Wolfe Research. The analyst upgraded shares of the online pet retailer to "outperform" from "peer perform" and named it a top pick, citing potential for revenue and margin growth, as well as robust valuation.
Over the last nine months, CHWY is up nearly 107% and boasts a 62.2% year-over-year lead. The equity has moved steadily higher since suffering an early November bear gap, working its way back towards its June 27, 12-month high of $39.10. Also providing support in recent weeks has been the 40-day moving average.
Despite this positive price action, a large swath of covering brokerages remain sidelined. Coming into today, 11 of 27 analyst rated Chewy stock a tepid "hold," leaving room for more upgrades to roll in and boost the security higher.
A short squeeze could keep wind at CHWY's back. Though short interest has started to unwind, it still represents 7.4% of the stock's available float, or more than two days' worth of pent-up buying power.
For those looking to move in on the security, options look like an affordable way to go. Chewy stock's Schaeffer's Volatility Index (SVI) of 46% ranks in the 4th percentile of its annual range, implying options traders are pricing in lower-than-usual volatility expectations.