Why Chewy Stock Surged Higher on Thursday: Key Drivers Revealed

Pet retail giant Chewy defied market gravity with an unexpected Thursday rally—here's what fueled the jump.

Breaking Down the Momentum

Analysts pointed to stronger-than-expected quarterly metrics, though specific numbers weren't disclosed. The move caught short-sellers off guard, triggering a classic squeeze scenario.

Sector-Wide Tailwinds

Pet care stocks broadly outperformed as consumer spending patterns shifted toward essential—or at least emotionally essential—categories. Because nothing says 'rational market' like betting on premium dog treats during economic uncertainty.

Looking Ahead

Whether this pop has legs depends on sustained revenue growth and margin expansion. For now, traders are scratching the right ears.

Barking up the right tree

The first of the two upgrades was made by Seaport Global Securities's Aaron Kessler. That morning, Kessler upped his recommendation to buy from the previous neutral, at a price target of $47 per share. That's 30% above the company's most recent closing stock price.

Image source: Getty Images.

The analyst's MOVE came a day after Chewy reported its second-quarter results. According to reports, Kessler waxed bullish in his update about the company's strong year-over-year revenue growth of nearly 9%, accompanied by quite robust gross margins.

Chewy was actually punished by the market for its performance during the period, and Kessler clearly feels this is unjustified. In his view, the negative reaction stemmed from increased selling, general, and administrative costs, plus higher investments anticipated in the second half of this year. However, he wrote that these investments are strategic and should boost fundamentals.

Promising programs

A bit later that morning,'s LEO Horowitz also upgraded Chewy to buy from neutral, upping his price target to $45 per share from $38 in the process. Among other factors, according to reports, Horowitz flagged appealing company initiatives such as the Chewy+ Membership program as likely growth drivers.