11:27 AM EDT, 10/29/2025 (MT Newswires) -- Cheesecake Factory's ( CAKE ) sales have to increase to drive the stock, Morgan Stanley said in a note Wednesday.

The investment firm said the company's Q3 revenue of $907 million, while in line with guidance, fell short of the consensus of $912 million.

Morgan Stanley said that on the bright side, the company may continue to see some margin upside amid the "good" cost and operational execution and "tame" inflation.

Morgan Stanley also noted that Cheesecake Factory's ( CAKE ) 2026 revenue growth guidance of 4% to 5%, which is lower than the Street's roughly 6% projection, reflects the company's view that demand will remain slow in Q4 and early next year before improving steadily through 2026.

Morgan Stanley cut its price target on the company to $49 from $50, with an underweight rating.

Shares of Cheesecake Factory ( CAKE ) were down nearly 5% in recent trading.

Price: 51.64, Change: -2.70, Percent Change: -4.96