Wendy's (WEN) US same-store-sales growth remained weak in June, with trends likely to continue in July and management not expecting any improvement in H2, Morgan Stanley said in a note Friday.

The investment firm said the management "reasonably" withdrew full-year guidance and new Chief Executive Bob Wright has identified the issues plaguing the company, including quality, value, operations and marketing, validating some of Morgan Stanley's prior cautious views.

Addressing these issues could be a meaningful mover for the stock, according to the note. The five key areas targeted under a turnaround plan include improving food quality while providing value, revamping branding and marketing, enhancing operations for customer satisfaction, improving digital tools, and aiming for unit growth and domestic expansion.

For the rest of the year, US same-store-sales growth is expected to be similar to H1, though this may be conservative, particularly in Q4, Morgan Stanley said. Wendy's also lowered its dividend to $0.07 for greater capital allocation flexibility, the firm added.

Morgan Stanley kept an underweight rating on Wendy's and lowered its price target to $5.50 from $7.

Shares of Wendy's were down 5% in Monday trading.

Price: 7.31, Change: -0.39, Percent Change: -5.01