🐶 A Pet-Friendly Stock Play

Plus, you won't believe what inspired Walmart's first rebrand in two decades...

January 13, 2025

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Happy Monday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟨 | US stocks were mixed today as investors rotated out of the major tech winners of 2024.

  • 📈 | One Notable Gainer: Several health insurers got a boost after federal regulators proposed a policy that could result in $21 billion in additional Medicare Advantage payments. UnitedHealth Group’s (UNH) stock rose nearly 4%, buoying the Dow.

  • 📉 | One Notable Decliner: Not all health-related stocks were so lucky. Moderna (MRNA) shares slumped almost 17% after cutting its sales outlook by some $1 billion on a sharp decline in vaccine demand.

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S&P 500 Heatmap. Credit: Finviz

All Stock Heatmap. Credit: Finviz

Global ADR snapshot. Credit: Finviz

MARKET MOVERS

NVIDIA, Palantir, Edison

NVDA (-2%) / PLTR (-3.4%) There’s a popular tech stock washout Monday as Palantir, Nvidia and Rigetti Computing drop (CNBC)

EIX (-11.9%) Southern California Edison parent's stock drops amid investigation over potential role in LA wildfires (YF)

CF (+7.6%) Piper Sandler raises CF Industries stock rating to Overweight citing increasing grain prices (Investing.com)

MOS (+8%) Mosaic and Fosfatados Centro Announce Agreement for Sale of Phosphate Mining Unit in Brazil (AccessWire)

RGTI (-32.3%) / QBTS (-33.6%) D-Wave and Quantum-Computing Stocks Slide. Meta’s Zuckerberg Sees Practical Uses ‘Quite a Ways Off.’ (Barron’s)

OVERHEARD ON THE STREET

CNBC: President Joe Biden announced student debt forgiveness for 150,000 more borrowers in his final days in office.

Reuters: A New York Fed survey found mixed inflation expectations in December, with consumers predicting steady inflation at 3% a year from now.

AP: Elon Musk confirmed that a third person has received a Neuralink brain implant, as part of the growing field of brain-computer interface technology.

WSJ: Goldman Sachs launched a new group to capitalize on the private-credit surge and expected private-equity deal boom.

TOMORROW’S TRADE IDEA, TODAY

Evercore ISI Is Pet-Friendly

Pet Pampering

Americans are ready to get back to pampering their pets, Evercore ISI (EVR) predicts. That could be good news for Chewy (CHWY).

Consumers cut back on a lot of expenses in the high-inflation, high-interest environment of the past few years. That included spending on their furry friends. But as the economy steadily stabilizes, Evercore has noted growth in pet adoptions and households, a trend it believes will continue.

In response, the advisory firm raised its price target for online pet supply retailer Chewy by $13 to $47, reflecting more than 30% from the stock’s close today.

Human-Grade Growth

Evercore analyst Mark Mahaney projected that pet spending will hit $207 billion by 2030, up from $160 billion this year. That reflects a compound annual growth rate of 5.3% over five years, with food accounting for 41% of total pet expenditures in 2030, or $85 billion.

Meanwhile, consumers are increasingly looking to do said spending online. In a recent survey conducted by the firm, 85% of respondents said they bought pet supplies online, and more than half had used Chewy in particular.

Mahaney says this suggests that the retailer is well-positioned for both growth and market dominance.

Feeding the Bulls

The analyst believes that, should moderating inflation lead to reduced volatility in pet supply prices, Chewy will remain one of the top online destinations for pet supplies and grow at a rate equal to or faster than the overall market in 2025 and beyond.

Mahaney’s not the only outspoken advocate for Chewy. Of the 31 analysts covering the stock, 19 rate it a Buy or Strong Buy, and none consider it an Underperform or Sell candidate.

It could be a big year for the Dog People and Cat People out there. For Chewy, that adds up to a lot of Bull People.

Are you bullish or bearish on Chewy (CHWY) over the next 12 months?

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ON OUR RADAR

WSJ: As fires worsen LA's housing crisis, many middle-class homeowners, whose wealth was tied to their properties, are now left uncertain about their next steps.

AP: The IRS is sending $2.4B in automatic stimulus payments to around 1M taxpayers who didn’t receive pandemic-era checks.

CNN: Walmart unveiled its first logo redesign in nearly 20 years, featuring a nod to founder Sam Walton's trucker hat.

FRIDAY’S POLL RESULTS

Are you bullish or bearish on News Corp (NWSA) over the next 12 months?

🟨🟨🟨🟨🟨🟨 🐂 Bullish

🟨🟨🟨🟨🟨🟨 🐻 Bearish

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