What happened

Shares of Chewy (CHWY -0.64%) rallied on Friday, surging as much as 8.1%. As of 2:48 p.m. EST, the stock was still up 4.6%.

While the rebounding market no doubt helped fuel the climb, the pet-centric e-commerce platform was the recipient of some particularly bullish commentary by a pair of Wall Street analysts.

So what

First up was Needham analyst Anna Andreeva, who named Chewy her top pick for 2023. The analyst cited a meeting with management as boosting her already bullish opinion of the stock. Andreeva was particularly optimistic concerning management's expectations regarding customer additions and lapping the tough comps represented by its 2020 and 2021 cohorts. 

The analyst believes that while net customer additions will remain "muted for now," the net sales per active customer, or NSPAC, metric has "ample room to head higher" in 2023 from its current run rate in the mid-teens. Andreeva maintained a buy rating and a $55 price target on the stock, which represents potential gains of 25% for investors compared to Thursday's closing price.

She wasn't the only one. Wedbush analyst Seth Basham upgraded Chewy to outperform (buy) from neutral (hold), while assigning a $55 price target. The analyst also cited expected acceleration of the company's active customers but pointed to continued "material" improvement in Chewy's earnings before interest, taxes, depreciation, and amortization (EBITDA) margins as the company "turns the corner." 

In the face of challenging macroheadwinds, Basham believes the pet sector will remain resilient, driven by a steady demand for consumables like pet food.

Now what

Like many e-commerce companies, Chewy's pandemic-fueled boost in 2020 and 2021 gave way to tough comps over the past year. Lapping those high watermarks will result in more normalized expectations, while the company's ability to continue to add active customers will drive the business forward.

Furthermore, Chewy's valuation is attractive, trading for less than 2 times next year's sales when most experts agree that a reasonable price-to-sales ratio is between 1 and 2. That's one of the many reasons Chewy stock is a buy.