Morgan Stanley cut its price target on Chewy to $36 from $37 while maintaining an Overweight rating, calling the stock's 11% sell-off on earnings day an overreaction in a note titled Managing Through the Treat-cession. Chewy's Q2 fiscal 2026 net sales of $3.33 billion grew 7.3% year over year, but organic growth was 5.7% after stripping out contributions from the SmartPak and Modern Animal acquisitions, decelerating approximately 120 basis points from Q1. The EBITDA beat included roughly $15 million in one-time items, and excluding those, the midpoint of fiscal year 2026 EBITDA guidance decreased by approximately 6 basis points, while stock-based compensation jumped 17% quarter over quarter. Morgan Stanley sees weakness stabilizing at roughly 6% organic growth and views the redesigned Chewy+ membership program, launching very shortly, as the key catalyst that could drive fiscal 2027 top-line acceleration. The firm's DCF yields a $36 base case, a $55 bull case requiring 8% revenue growth and 13% margins, and a $14 bear case assuming 4% revenue growth.
Chewy IncMorgan Stanley cut its Chewy price target to $36 from $37 while keeping Overweight, calling the 11% earnings-day sell-off overdone.
Morgan StanleyMorgan Stanley issued the analyst note cutting Chewy's price target and maintaining its Overweight rating.
