12:10 PM EST, 11/25/2024 (MT Newswires) -- Chewy's (CHWY) fiscal Q3 results are likely to show continued momentum across the business, Morgan Stanley said in an earnings preview Monday.

The online pet store is scheduled to report fiscal Q3 results on Dec. 4. Morgan Stanley projects revenue at roughly $2.86 billion.

"We expect [Chewy's Q3] print to show sustained momentum, but note there is a high bar to clear," Morgan Stanley said in the note. "The pet macro still appears to be mixed, but we do see a few pet ownership greenshoots with improving intentions to get a pet and as adoptions grew [year on year] for the first time since early 2023."

The firm expects Chewy's fiscal Q3 net adds to accelerate to 50,000 sequentially, around consensus at 54,000, according to the note.

"Although positive net adds in [Q3] seems logical, we find it hard to have high conviction as the company has had multiple false starts [and] our [50,000] estimate represents just 0.3% q/q growth, meaning a single small impact could be enough to flip it negative," Morgan Stanley said.

The brokerage raised its price target on the company's stock to $36 from $33 while maintaining its overweight rating.

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