Argus raised online pet products retailer Chewy (NYSE:CHWY) to Buy from Hold in a note Wednesday, with a price target of $30 per share.
Analysts said the firm has a positive view of Chewy's focus on nondiscretionary pet products and services, which represent over 80% of its revenue.
"We also like the recurring sales from its autoship service (75% of revenue), which provides predictable income and helps the company efficiently manage its operations," the analysts wrote.
"While Chewy may face weak economic conditions and substantial investment spending in the near term, we expect its expansion into higher-margin products and services, where the company has been gaining market share, to help offset pressure on earnings."
They contend that the recent pull-back in CHWY shares, which are down 33% this year, presents a buying opportunity for investors.