By Angela Palumbo

Chewy stock jumped Monday after analysts at BofA Securities named the pet e-commerce company as their top small-to-mid cap internet pick.

The stock market has had a bumpy ride this year as investors try to navigate what the ongoing trade war will mean for the broader economy.

Wall Street generally believes tariffs tend to lead companies to raise prices to offset increased import costs, and consumer-facing companies with more exposure to essential spending -- and lower prices -- could be safe stocks to hold.

The BofA analysts view Chewy stock among the better positioned stocks.

Shares of Chewy closed up 4.9% to $47.46 on Monday, its highest close since Feb. 15, 2023, according to Dow Jones Market Data.

Chewy not only sells pet products online, but also offers a feature that allows users to have items shipped automatically on a schedule, similar to a subscription service, for a discounted price.

On top of the ease of getting something shipped on a recurring basis at a discount, BofA Securities analysts wrote that more than 85% of Chewy's sales comes from non-discretionary categories like consumables and pharmacy. Those are categories that are more likely to hold up in a possible recession.

"Chewy is our top SMID cap Internet pick given consistent share gains against the pet industry, exposure to non-discretionary & subscription-like sales, and margin expansion," the analysts said.

Shares have surged 41% this year, greatly outperforming the 0.9% increase of the S&P 500 in the same time frame. The company reported better-than-expected fourth-quarter financials in March, which CEO Sumit Singh attributed to "strong active customer growth."

Chewy is scheduled to report first quarter earnings on June 11.

Chewy stock is down 60% from its closing high of $118.69 on Feb. 12, 2021. The stock was known as a pandemic darling after surging during the height of Covid-19. People relied on Chewy to get pet essentials delivered straight to their door when businesses were closed. Chewy now has to compete with traditional brick and mortar stores, on top of other e-commerce rivals, specifically Amazon.com.

The BofA analysts recommended five other SMID cap tech stocks on Monday: Coherent, JFrog, Kyndryl Holdings, SailPoint, and Seagate Technology Holdings.

Write to Angela Palumbo at angela.palumbo@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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June 02, 2025 16:40 ET (20:40 GMT)

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