Shares of Chewy Inc rose nearly 20% in premarket trading on Thursday after the online pet supplies retailer raised its annual revenue forecast and said it would enter the Canadian market.

The stock is set to claw back most of its year-to-date losses if gains hold through the session.

The company posted a surprise profit for the first quarter as its sales benefited from strong customer loyalty, prompting at least two brokerages to raise their price target.

The median price target of the 31 analysts covering the stock is $45, which is about 53% higher than the last closing price of $29.49.

In its earnings call, Chewy said it would expand into Canada in the third quarter, as the retailer looks to capture international growth in the fast-growing pet health care market.

"Canadian marketplace represents upwards of $15 billion in annual pet sales and is ~10% points underpenetrated online vs. the U.S.," said Roth MKM in a note.

Chewy, co-founded by activist investor Ryan Cohen, was one of the major gainers in the sector after the pandemic triggered a rise in pet ownership. But the demand has normalised from its pandemic-led peak and has also taken a hit from high inflation.

The company now expects its full-year revenue between $11.15 billion and $11.35 billion, compared with its prior forecast range of $11.10 billion to $11.30 billion.

Analysts on average were expecting revenue of $11.31 billion for 2023.

"We do not expect our investments in Canada to deviate us from our projected long-term profitability, cost or CapEx targets," said Chief Executive Officer Sumit Singh.

Excluding items, the company posted net income per share of $0.20 for the first quarter, compared with analysts' expectations of a loss of $0.04 per share.

(Reporting by Vansh Agarwal in Bengaluru; Editing by Shweta Agarwal)