Oppenheimer downgraded Chewy (NYSE:CHWY) to Perform from Outperform, removing the price target on the stock in a note Wednesday.
Analysts told investors that following the online pet retailer's disappointing forward commentary on net adds and the recent pullback in its shares, Oppenheimer has spent time revisiting its investment view on CHWY.
"We expect a more challenging backdrop to persist for at least a few more quarters, amid recent signs of weakness in the historically resilient pet food category and the potential for more muted inflation benefits in FY24 (Jan. 2025)," the analysts wrote.
"In addition, we believe the current higher rate backdrop represents another pressure point for shares," they added.
While the firm continues to look favorably on CHWY’s longer-term prospects, they are awaiting definitive signs of progress on net adds and a potential reset of Street numbers.