Investing.com -- MoffettNathanson downgraded pet products retailer Chewy to Neutral from Buy and slashed its price target to $22 from $50, citing slowing organic growth, increased macroeconomic sensitivity and a less compelling valuation outlook.

The brokerage said Chewy's underlying growth remains underwhelming. Excluding contributions from recent acquisitions, including Modern Animal and SmartPak, it estimates fiscal 2026 revenue growth of about 5.7%, slowing from 6.2% in fiscal 2025. After adjusting for growth from Chewy's veterinary clinic business, core growth falls further to roughly 5.5%, undermining expectations for an industry recovery.

Analysts also questioned management's explanation for softer demand trends, noting a disconnect between earlier commentary about improving customer additions and lower churn, and more recent remarks pointing to weaker discretionary spending and slower growth in net sales per active customer. The firm said recent cuts to revenue guidance appeared difficult to reconcile with indicators suggesting resilient pet-owner spending.

Following Chewy's first-quarter results, MoffettNathanson lowered its fiscal 2026 revenue estimate to $13.43 billion from $13.63 billion and trimmed profitability forecasts. The company recently reduced its full-year revenue outlook to $13.40 billion-$13.55 billion from $13.60 billion-$13.75 billion previously.

While first-quarter adjusted EBITDA exceeded expectations and active customer growth remained steady, the brokerage said investors may be less willing to assign a premium valuation to a business generating only mid-single-digit organic revenue growth. As a result, it shifted its valuation methodology to a market-style earnings multiple and cut its target price accordingly.

MoffettNathanson now expects Chewy to earn $0.86 per share in fiscal 2026, below its prior estimate of $0.92, while maintaining a cautious stance on the company's growth trajectory and customer acquisition outlook.