Morgan Stanley upgraded CAVA Group stock to "Overweight" from "Equalweight." The firm also increased its price target to $90 from $86.
Morgan Stanley attributed a recent decline in CAVA's share price to weaker credit card data. The firm did not link the decline to a flaw in the company's long-term fundamentals.
The investment bank expressed confidence in CAVA's continued growth. It cited strong key performance indicators: customer traffic, new store performance, and margin visibility. Analyst Brian Harbour noted CAVA's valuation is not cheap. Harbour stated the valuation is defensible, citing CAVA's robust fundamental story in the restaurant industry.
CAVA's shares rose on Wednesday following the upgrade.