Chewy (NYSE:CHWY) peeled off 7.57% on Wednesday after the company’s Q2 earnings report showed some cracks in consumer demand.

Analysts were mixed in their reaction to the Chewy (CHWY) report.

Evercore ISI said the key negatives from the report were the 40% year-over-year jump in inventories and the sequential decline in active customers amid falling pet adoption rates post-COVID and economic pressure on consumers. While firm said the stark reality is that some of that pet love inspired by the pandemic turned out to be ephemeral and fleeting, an Outperform rating is maintained due to the growth opportunities still in play. Evercore slightly reduced revenue an EBIDTA estimates on Chewy (CHWY) and trimmed the price target to $54 from $55.

Morgan Stanley is more cautious on Chewy (CHWY). Analyst Lauren Schenk and team walked away from the report feeling better about the online pet retailer’s margins, but thinks shares will be range-bound due to concerns over pricing tailwinds and the reduced marketing spending. Morgan Stanley has an Equal-weight rating on CHWY and price target of $39.

During Chewy’s (CHWY) earnings call, management made the case that some of the downward swing in momentum is transitory.

“We believe that the current dynamic that we are observing discretionary categories like hard goods is temporary in nature and that demand will improve as consumer sentiment recovers and pet household growth returns to historical levels,” noted CFO Mario Marte.

Read the full Chewy earnings call transcript.