What happened

Shares of pet e-commerce company Chewy (CHWY 0.19%) spiked 26.1% in October, according to data provided by S&P Global Market Intelligence. To be fair, the S&P 500 was up 8% for the month, so Chewy benefited from a more optimistic market. That said, the outperformance is noteworthy and was driven by optimism for the company's upcoming financial report and by a new product launch.

So what

Chewy is expected to report financial results for the third quarter of 2022 later in November. However, analysts are already upbeat about the possibilities. The stock got hot in October thanks to data from third-party research group YipitData, which suggested Chewy will beat its earnings guidance in Q3, according to Yahoo! Finance.

As the month progressed, Wall Street kept positively weighing in on Chewy stock. On Oct. 6, Oppenheimer analyst Rupesh Parikh recommended buying Chewy stock, giving it a price target of $42 per share, according to The Fly. The company is known for selling consumable goods like pet food. However, Parikh specifically noted Chewy's ability to expand into other areas like pet health.

This expansion is something Jefferies analyst Corey Grady noted as well. Grady recommended buying Chewy stock on Oct. 21 and, according to The Fly, gave Chewy stock a more optimistic $57 per share price target, praising the company's "adjacent opportunities."

On Oct. 20, Chewy announced a partnership insurance-technology company Lemonade to offer pet insurance to customers. For clarity, Chewy already offered pet health services and had insurance plans. But the partnership with Lemonade will expand the options for consumers when it launches next spring. 

Count Piper Sandler analyst John Barnidge among those very bullish on Chewy stock in light of its partnership with Lemonade. Exceeding Parikh's and Grady's price targets of $42 and $57, Barnidge gave Chewy stock a price target of $62 per share the day the partnership was announced, according to The Fly -- almost 100% upside from where it was trading at the time. 

Now what

Investors shouldn't buy Chewy stock ahead of earnings simply because Wall Street is bullish. Commentary from analysts is helpful in understanding what's going on with the business and the market. But the analysts aren't always right. And sometimes they're just thinking about the next quarter, not the next decade.

I'd encourage readers to take the longer-term approach when evaluating Chewy stock. In the second quarter of 2022, the company continued showing improvement in key metrics like average order value per active customer, gross margin, and net income to name a few. That's what you want to see.

However, Chewy did take a step back in active customers, dropping from 20.6 million in the first quarter to 20.5 million in Q2. The drop is concerning considering the company believes its market opportunity is much bigger than this. However, it's guiding for 10% to 11% net sales growth in the upcoming third quarter. And if it exceeds this guidance as YipitData suggests, perhaps that means it was able to return to growth for its customer base.