Is CAVA Stock a Buy After Morgan Stanley’s Upgrade?

TLDR

• Morgan Stanley upgraded CAVA to overweight from equal weight, lifting its price target to $90 from $86
• The stock rose 3% Wednesday morning after closing Tuesday at $69.97
• Analyst Brian Harbour cited strong KPIs including traffic growth, unit growth, and margin visibility
• CAVA’s last quarterly earnings beat estimates with EPS of $0.20 vs $0.17 expected and revenue up 32.1% year over year
• 28 analysts cover the stock with a consensus “Moderate Buy” rating and an average price target of $93.38

---

CAVA Group stock climbed 3% Wednesday morning after Morgan Stanley upgraded the stock to overweight and raised its price target to $90, up from $86.

CAVA Group, Inc., CAVA

The stock had closed Tuesday at $69.97, following a recent pullback driven by softer credit card data. That weakness appears to have caught Morgan Stanley’s attention.

Analyst Brian Harbour said the downside move prompted the upgrade. “We don’t have concerns about longer-term fundamentals and have long had a positive bias towards the story,” he wrote.

Harbour flagged CAVA as one of the few growth names in the restaurant sector where most key performance indicators are moving in the right direction — traffic growth, unit growth, new store performance, and margin visibility all getting the green light.

On valuation, Harbour acknowledged the stock isn’t cheap, even after the recent dip. But he argued the premium is warranted: “Valuation is defensible, because it remains one of the strongest fundamental stories in restaurants.”

The $90 price target was based on EV/EBITDA multiples and supported by discounted cash flow analysis.

Analyst Coverage and Ratings

CAVA carries a consensus “Moderate Buy” from the 28 firms tracking it. Of those, 17 have buy ratings, nine hold, one sell, and one strong buy. The average 12-month price target sits at $93.38.

Royal Bank of Canada has one of the more bullish targets at $105, rating the stock outperform. JPMorgan and TD Cowen both have $90 and $100 targets respectively, each with buy-equivalent ratings. DA Davidson sits at $84 with a neutral call.

Recent Earnings and Institutional Activity

CAVA’s most recent quarter was strong. The company reported EPS of $0.20, beating the $0.17 consensus, with revenue coming in at $438.27 million — well ahead of the $360.89 million estimate and up 32.1% year over year.

The 12-month trading range sits between $43.41 and $98.79. The stock’s 50-day moving average is $79.32 and the 200-day is $76.94, meaning the current price is trading below both.

Institutional investors own 73.15% of the company. Several large funds added to positions in recent quarters, including Capital Research Global Investors, which grew its holding by 27.2%, and Alliancebernstein, which nearly doubled its stake.

On the insider side, CFO Tricia Tolivar sold around 4,969 units of stock in June at $89.43, and insider Kelly Costanza sold 12,490 units at $90.00. Both sales were tied to tax withholding on vested equity awards rather than a change in outlook.

Analysts project CAVA will post full-year EPS of $0.55 for the current year.