Morgan Stanley maintains its bullish stance on Chewy despite a recent stock sell-off, citing a valuation disconnect at $18.77 per share.
Chewy shares plunged to $18.77, their lowest in over a year, after the company cut its full-year revenue outlook for fiscal 2026. The stock fell more than 11% over five trading sessions following the guidance reduction, which blamed softer consumer spending on pet products.
Despite the sell-off, Morgan Stanley maintained its Overweight rating on Chewy and set a $42 price target, down slightly from $43. The firm argued the stock trades at a steep discount, with multiples of 7 times 2027 EBITDA and 19 times 2027 earnings, below its growth profile.
Morgan Stanley described the current price as disconnected from Chewy’s intrinsic value, implying over 120% upside from Wednesday’s close.