02:09 PM EDT, 08/26/2024 (MT Newswires) -- Chewy (CHWY) probably will top EBITDA estimates for fiscal Q2 and boost full-year guidance, partly on "fundamental levers which should drive incremental margin expansion through the year," Morgan Stanley said Monday in a report.

EBIDTA at $123 million in Q2 will top Wall Street's estimate by 8%, Morgan Stanely forecast. The firm expects a "slight beat" on revenue. Results are expected Wednesday.

Chewy has a "durable margin expansion story and the potential for revenue acceleration to the mid to high single digits range as the pet macro normalizes," the report said.

"Pet ownership appears to be stable" from the previous quarter "but not yet inflecting as we continue to expect net adds to return positive" in Q3, the report said.

The firm boosted forecasts for fiscal 2024 EBITDA by 3% and by 2% for fiscal 2025.

Morgan Stanley raised its price target on Chewy stock to $30 from $28 and maintained its overweight.

The company's shares fell 4.6% in recent trading Monday.

Price: 25.48, Change: -1.22, Percent Change: -4.57