Morgan Stanley Cautious on Pet Spending Amid Economic Pressures
Morgan Stanley has issued a cautious outlook for the U.S. pet care market amid economic pressures, highlighting that even loyal Chewy customers are becoming more budget-conscious in 2026. The firm reviewed Chewy’s Q2 fiscal results and cut its price target to $36 from $37 while maintaining an Overweight rating. Despite Chewy raising revenue and EBITDA guidance for the year, the stock fell sharply after earnings due to concerns over slowing organic growth and one-time gains inflating performance metrics. The firm noted that macroeconomic conditions are challenging pet spending trends, which had seen a surge during the pandemic but have since slowed. Morgan Stanley estimates Chewy’s underlying organic growth has stabilized at around 6% year-over-year, suggesting it may remain in a holding pattern until broader economic factors shift.
