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After a “pandemic-fueled spike” in pet ownership, the pet care industry is set to hit single-digit growth in the coming few years, according to Morgan Stanley officials, as reported by Seeking Alpha.

“[Morgan Stanley’s] ‘Welcome to the Petriarchy’ note observes a confluence of trends covering demographics, household formation and consumer behavior driving the changes,” the Seeking Alpha article said. “Growth in pet ownership more than tripled in the pandemic—the firm estimates that growth in household pet ownership went from about 1 percent per year to 3.6 percent in 2020—and it believes the number of households owning pets will grow 14 percent by 2030.”

It was also reported that 65 percent of millennials—roughly 18- to 34-year-olds—are looking to add or acquire a pet in the next five years, compared to 43 percent of other age groups. Millennials are also likely to spend more on pets than older owners, according to the report.

Seeking Alpha highlighted key companies under Morgan Stanley’s radar:

• Chewy. The online retailer is a No. 1 player with consistent revenue growth, but Morgan Stanley officials “struggle with valuation,” and it rates the stock Equal Weight, according to Seeking Alpha.

• Tractor Supply. Morgan Stanley officials have a higher confidence in growth, with about 50 percent of the business generated from livestock and pets, but their “near-term upside is priced into the stock.”

• Nestlé. Morgan Stanley officials “like” this particular U.S. leader in pet food, where pet care makes up 17 percent of revenue, according to Seeking Alpha.

• Colgate-Palmolive. The company can draw from tailwinds through its Hill’s pet nutrition segment, which consists about 17.5 percent of sales. However, Morgan Stanley officials see that growing at 6.3 percent compound annual growth rate (CAGR) over the coming three years, Seeking Alpha pointed out.

• General Mills. Blue Buffalo makes up nearly 10 percent of the company’s sales and should grow in high single digits long-term, according to the article.

• J.M. Smucker. The company has been losing share in dog food and pet treats and faces “hot competition” in cat food, Seeking Alpha said. Morgan Stanley rates it Underweight.

For more of PPN's coverage on pet care companies, read: