Stocks to Watch: Chewy and Gitlab Show Strong Analysts’ Support

Investor sentiment can play a vital role in stock performance. However, analyzing trends in sentiment and analyst coverage often proves more significant than simply relying on consensus ratings. For example, a Moderate Buy or Buy rating loses some weight if recent changes include downgrades or a lack of coverage. These factors can signal potential stock price declines. Conversely, a stock with a consensus sell rating that is experiencing upgrades is more appealing as those can indicate a positive market turnaround. 

Increasing analyst interest can also signal positive momentum for stock prices. When analysts cover a stock more frequently, it often leads to increased investor interest and inflows of capital. In this discussion, we highlight two companies, Chewy CHWY and Gitlab GTLB, both of which are receiving new attention and upgrades that support their growth prospects.

TD Cowen Projects Growth for Chewy, Inc. Amid Positive Analyst Outlook

After surpassing expectations in recent results, analysts for Chewy have begun to raise their price targets. Currently, MarketBeat.com tracks 22 analysts who show strong confidence in a Moderate Buy rating. Recently, TD Cowen initiated its coverage, rating Chewy as a Buy with a price target of $38. This target represents a 28% increase from Chewy’s recent trading levels, which are around $28.50. Over the past three months, consensus price targets have increased by 12% and are expected to rise further due to anticipated revenue growth and earnings improvements.

While Chewy experienced a slowdown in revenue growth during F2025, analysts predict a recovery and acceleration to over 5% in F2026. TD Cowen also forecasts a compound annual growth rate (CAGR) of 9% over the next five years, nearly double the industry’s average. Such growth will be supported by improved profit margins, with the EBITDA margin projected to nearly double to 8%. Key drivers will include increased customer counts and expanded services in the pet health market.

Notably, Chewy maintains a healthy financial balance. The company’s strong cash flow helps it keep debt levels low, with long-term liabilities being less than 1 times cash and just over 1 times equity. Additionally, institutional investors hold almost 95% of Chewy’s shares and have been net buyers throughout 2024.

Morgan Stanley Identifies Gitlab as a Leading Market Consolidator

Morgan Stanley recently initiated its coverage of Gitlab, rating the stock as Overweight with a price target of $70, signaling a potential increase of 30% from current levels. The firm regards Gitlab’s DevSecOps platform as a significant player in a fragmented industry, predicting a 25% revenue CAGR over the next four years. This growth is expected to be accompanied by an increase in margins as software developers focus on efficiency and security.

MarketBeat.com reports that 25 analysts currently support a Moderate Buy rating for Gitlab, with consensus price targets also on the rise. Notably, the number of analysts covering Gitlab has doubled in the last 18 months, indicating growing confidence. The consensus target suggests a 23% upside from current trading levels, and Morgan Stanley’s target adds an impressive 600 basis points to this projection, which could bring the stock to an 8-month high.

The article “Top 2 Analyst Picks: Stocks Poised for Double-Digit Growth” originally appeared on MarketBeat.