Sonos (SONO) delivered a solid fiscal Q1 beat, but the company is facing uneven consumer spending and its memory exposure, while minimal, also creates some risk, Morgan Stanley said in a note Wednesday.

The company released a largely in-line Q2 outlook and reiterated an upbeat H2 revenue trajectory with new product launches, but it's "not fully out of the woods" as customer response to the new products has yet to be determined and there remains uncertainty in memory costs and supply in H2, the investment firm said.

Morgan Stanley said it expects a 2% year on year revenue growth in Q2, which may improve to 6% to 7% growth in H2, but that depends on the "execution of product launches and any headwinds from the memory cycle."

The investment firm also forecasts a decrease in gross margins in H2 compared with H1 due to forex compares as well as "inventory reserve release dynamics, seasonal loss of leverage and memory costs."

Morgan Stanley kept its equal-weight rating on Sonos, but increased the price target to $18 from $17.

Shares of Sonos were up 9% in recent trading Wednesday.

Price: 15.95, Change: +1.32, Percent Change: +9.02