01:37 PM EDT, 05/30/2024 (MT Newswires) -- Chewy (CHWY) is likely "out of the doghouse" after delivering better than expected Q1 revenue with a large EBITDA beat and launching its first buyback program, Morgan Stanley said in a note.

"CHWY called out encouraging green shoots with positive pet ownership trends and inflecting customer metrics," Morgan Stanley said. "With a 1Q sales beat and positive green shoots, we now view 2Q and FY24 revenue guidance as conservative."

The report also said there is a real probability for a consistent beat and raise on both the top- and bottom-line through FY24 if the pet macro continues to recover.

Morgan Stanley said its bull thesis remains on track, keeping the stock overweight while raising its price target to $28 from $27.

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