Analysts predict significant stock upsides for Chewy, Peloton

The Nasdaq Composite has dropped 9% so far this year, leading some Wall Street analysts to identify potential value in two consumer brands: Chewy and Peloton. Both stocks have seen significant declines from their previous highs, but analysts suggest they could rise between 49% and 128% based on expected improvements in their financial performance. Chewy, the popular online pet supplies retailer, has faced challenges due to rising inflation. However, analysts note that its sales growth has stabilized. Recently, an analyst upgraded Chewy's rating, setting a target price of $47, which indicates a potential increase from its current price of $31.50. The company is seeing steady growth in its higher-margin products, but risks remain, including reliance on suppliers in China. This could pose problems due to tariffs. Comparatively, Chewy's growth metrics look weaker against other e-commerce companies, such as Coupang, which may limit its appeal to investors. Peloton Interactive has also had a turbulent ride. The fitness company's stock fell sharply after a surge in demand during the pandemic but has recently shown signs of recovery. An analyst has raised its rating and set a price target of $15, suggesting it could double from its current price of $6.58. Peloton is seeing improved financial metrics, including a notable rise in free cash flow, thanks to better cost management under its new CEO. However, the company is struggling with a stagnant membership base, which declined by 4% over the past year. For Peloton to justify its stock price target, it will need to boost growth in its subscriptions, as that segment offers higher profit margins. Both Chewy and Peloton are in a challenging position, with analysts optimistic but cautious about their paths to recovery. Sustainable growth and improved financial results will be vital to their future stock performance.