Ingram Micro's (INGM) improved execution in fiscal Q4 is being offset by concerns about higher memory prices and limited free float in the second half of the year, Morgan Stanley said in a Tuesday note, describing the quarter as another step forward but with lingering risks ahead.

Fourth-quarter revenue outperformance was driven primarily by personal computers, smartphones, cybersecurity and AI infrastructure and graphics processing unit shipments, Morgan Stanley said.

The brokerage said it expects relatively solid growth in the first half of the year, followed by a sub-seasonal second half. The firm models gross margins trending lower in the first half and improving in the second half as personal computer and infrastructure strength fades later in the year.

The investment firm also flagged the potential impact of higher memory prices on device pricing and demand elasticity as a key risk in the back half of the year. It said Ingram Micro's limited free float could constrain valuation multiple expansion despite improving execution.

Morgan Stanley maintained an equal weight rating on Ingram Micro and raised the price target to $23 from $21.

Shares of Ingram Micro rose more than 12% in recent trading.

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