01:37 PM EDT, 05/15/2024 (MT Newswires) -- Jack in the Box (JACK) continues to face a challenging consumer environment following its weaker-than-expected fiscal Q2 sales, Morgan Stanley said in a report Wednesday.

"Current sales trends remain challenged," the firm said, noting that the company's quarter-to-date same-store sales are down about 1% at franchised stores. The topline miss mirrored an industrywide weakness, it said.

The company reported fiscal Q2 revenue of $365.3 million, down from $395.7 million a year earlier and behind market expectations of $369.7 million. Same-store sales during the period were down 2.5% versus a 9.5% growth rate a year earlier. Analysts polled by Capital IQ expected a 1.2% growth rate.

Morgan Stanley said the company's current SSS guidance of flat to higher by the low single digit for the year suggests improved sales trends in the second half, though it is "perhaps a stretch for some investors given current trends and the industry backdrop."

The firm said it now expects fiscal Q3 SSS to be flat, instead of rising by 3.0% as previously projected, but it raised its estimate for restaurant-level margin to 21.9% from 21.6%.

Morgan Stanley lowered its forecasts for full-year adjusted EBITDA to $323.7 million from $324.3 million, and adjusted EPS to $6.31 from $6.36.

It maintained its equal-weight rating on the stock and lowered its price target to $70 from $75.

Price: 53.36, Change: +0.29, Percent Change: +0.55