CAVA Group's (CAVA) "bullish" narrative remains intact after the company reported a strong Q1 performance, Morgan Stanley said in a report Wednesday.

"A strong 1Q we think a bit ahead of healthy expectations, which should support the stock, though probably doesn't change the bullish narrative much," the report said.

The report said CAVA was, and remains, priced to beat guidance, pointing to Q1 beat and some early Q2 momentum.

"This remains conservative if the year continues to trend similarly," the note said, adding that the main reservation on the stock is valuation.

"But we skew positive on the unit rollout and brand potential, and data points continue to support an optimistic view there with strong new store performance," the report said.

Morgan Stanley raised its price target to $86 from $85 while maintaining an equal weight rating.

Price: 83.49, Change: +5.37, Percent Change: +6.87