Morgan Stanley Upgrades CAVA Group Inc (CAVA) to Overweight, 'pressure lessening'

Morgan Stanley analyst Brian Harbour upgraded CAVA Group Inc (NYSE: CAVA) from Equalweight to Overweight with a price target of $41.00 (from $45.00).

The analyst comments "We're shifting our relative preference to CAVA where we have somewhat more confidence in the catalyst path and near term estimates, as well as the long term fundamental growth story, keeping in mind our ratings are not an explicit call on the 3Q. A small early lockup expiration in Sept, presumably some IPO holders selling, and higher short interest has affected CAVA but we see this pressure lessening (Dec is the later lockup expiration though for insiders). Valuation on near term numbers is still not immodest, likely a point of pushback (EV/store profit about aligned with CMG though), but we are sticking with the framework laid out in our recent initiation, adjusting for discount rates, which still leaves us with ~30% upside and our new PT is $41 from $45 prior. CAVA has better traffic trends than several peers (helped by new store performance) and we have greater conviction that both AUV/ sales and store margin upside vs expectations can be visible. Healthier food, workday traffic and favorable demographics amid potential economic uncertainty are relative advantages, in our view."

For an analyst ratings summary and ratings history on CAVA Group Inc click here. For more ratings news on CAVA Group Inc click here.

Shares of CAVA Group Inc closed at $32.08 yesterday.

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