Zebra Technologies' (ZBRA) demand environment and early Elo success are encouraging, with the company's guidance pointing to a reacceleration in 2026, Morgan Stanley said in a Thursday note.

The analysts noted that the company expects to fully offset the negative impact of higher memory costs by 2026 by securing supply and increase in its product prices starting in March, which will keep margins intact.

Morgan Stanley is encouraged by the company's targets for organic growth, but remains on the sidelines as it has not seen how elastic demand will be and how effective memory acquisitions will be, according to the note.

Morgan Stanley said it raised its Q1 revenue estimates, citing demand for manufacturing, and machine vision pipeline, among others.

Morgan Stanley maintained its equal-weight rating on the stock and raised its price target to $323 from $309.

Zebra Technologies' shares were down 3% in recent Friday trading.

Price: 266.05, Change: -8.10, Percent Change: -2.95