11:28 AM EDT, 08/09/2024 (MT Newswires) -- Sweetgreen ( SG ) is likely to benefit from automation and menu expansion, while questions about its total addressable market, or TAM, and how it affects valuation continue, Morgan Stanley said in a note Friday.

Analysts said the company is being asked more about whether automation might lead to changes in pricing, which could affect TAM in the long run.

"Recent data points on the business would seem relatively constructive, including 9% comps in the quarter and positive traffic and mix, with steak and plates the drivers," analysts said in the note.

Morgan Stanley said the company's "generally solid" Q2 results, higher full-year outlook, unit growth, optimism on menu initiatives and Infinite Kitchen performance will likely support the stock despite a slowdown in the industry.

The company raised its 2024 guidance due to strong performance, and although July was slower than Q2, it was better than expected, the analysts said, adding that for fiscal 2025, they expect a relaunch of the loyalty program, more innovation, and faster unit growth.

Morgan Stanley raised Sweetgreen's ( SG ) price target to $27 from $25 while keeping its equal-weight rating.

Sweetgreen ( SG ) shares were more than 25% higher in recent trading Friday.

Price: 32.84, Change: +6.59, Percent Change: +25.10