When it comes to investing in stocks, listening to analysts’ sentiment can be critical. However, it’s not just about the rating assigned; the trend in sentiment and coverage holds more weight. A “Buy” rating isn’t all sunshine and rainbows if recent revisions point towards downgrades and reduced coverage. Conversely, a stock labeled as a “Sell” but with recent upgrades and price target bumps indicates a different story; a potential market bottom might be on the horizon, propelling the stock into a bullish reversal.
Increasing analyst coverage serves as a tailwind for stock prices, with more coverage attracting more investor money. In the limelight are industry leaders like Chewy (NYSE: CHWY) and Gitlab (NASDAQ: GTLB), set to ride the analysts’ optimistic projections to new heights.
TD Cowen Bullish on Chewy, Inc.: Sees Long-Term Growth Ahead
Chewy’s stock has caught the eye of analysts with a streak of impressive performances, prompting a wave of upward price target revisions. MarketBeat.com reports a resolute “Moderate Buy” rating from 22 analysts, with fresh price targets surpassing the consensus estimate. TD Cowen recently initiated coverage on Chewy, rating it a “Buy” with a $38 price target, a significant 28% above the prevailing market price. This bullish outlook reflects strong revenue growth and a promising earnings forecast, propelling the consensus target up by 12% in the past three months.
While Chewy saw a modest growth in F2025, expectations are high for a robust acceleration in F2026. Analysts foresee revenue growth crossing the 5% mark in F2026, with TD Cowen projecting a 9% compound annual growth rate (CAGR) over the next five years, nearly doubling the industry average. This growth will be further bolstered by expanding margins, with the EBITDA margin expected to nearly double, driving enhanced free cash flow conversion. Chewy’s resilient balance sheet, boasting low debt levels and strong cash flow, coupled with institutional bullishness, further underpins its growth potential.
Morgan Stanley Bullish on Gitlab: Sees Market Consolidation Opportunity
Morgan Stanley’s bullish outlook on Gitlab pegs the stock as a prime player in a market ripe for consolidation. The firm initiated coverage with an “Overweight” rating and a $70 price target, representing a 30% upside potential from current levels. Gitlab’s DevSecOps platform is viewed as a key consolidator in a fragmented market, with a projected 25% revenue CAGR over the next four years, supported by a doubling of margins as software developers prioritize efficiency and security.
With 25 analysts keeping the faith with a “Moderate Buy” rating on Gitlab, the consensus target continues its upward trajectory, matched by a doubling in analyst coverage over the last 18 months. Morgan Stanley’s target, providing an additional 600 basis points to the consensus target, aligns with the positive market sentiment. A move towards consensus would mark a significant ascent for the stock, potentially reaching an 8-month high.
These stocks are set to soar, fueled by strong analyst endorsements and promising growth trajectories, offering investors the prospect of hefty returns in the current market landscape.
The article “Top 2 Analyst Picks: Stocks Poised for Double-Digit Growth” first appeared on MarketBeat.
