Chewy slips after J.P.Morgan downgrade on challenging industry backdrop
CHWY•Shares fall after downgrade
Chewy shares CHWY.N slipped 1.4% premarket to $20.78 after J.P. Morgan downgraded the pet retailer to "neutral" from "overweight" and cut its price target to $24 from $29.
Brokerage cites softer backdrop despite recent outperformance
The brokerage cited a challenged industry backdrop and muted organic growth.
It said the consumer backdrop in Q2 did not meaningfully recover, which could continue to pressure discretionary and premiumization.
J.P. Morgan said Q2 core earnings were aided by one-time benefits such as tariff refunds, gift-card breakage, inventory adjustments and vendor-funded merchandising activity.
Still, it said the company gained market share in Q2 and recent acquisitions outperformed, adding that it expects the trend to continue into Q3.
Chewy reported upbeat Q2 results and raised Q3 revenue forecasts earlier this week.
Year to date, up to Thursday's close, the stock was down 36%.
