01:33 PM EDT, 05/10/2024 (MT Newswires) -- Warby Parker ( WRBY ) could deliver its guidance for Q2 and the full-year but its expectation for selling, general, and administrative expenses, or SG&A, trajectory may be too optimistic, Morgan Stanley said in a Thursday note.

Morgan Stanley analysts said that the company's in-line Q1 SG&A results may have eased concerns raised by the Q4 miss in this area, which led to the company's first adjusted EBITDA miss in seven quarters. Concerns might reemerge in Q2 and beyond given that SG&A leverage is key in Warby Parker ( WRBY ) achieving its full-year profitability guide.

"We see room for ongoing Q2/full-year sales and gross margin upside, but are less convicted in management's SG&A leverage hopes. We'll be monitoring SG&A closely for this reason, and model Q2 and full-year profitability lower to in-line in the meantime," the analysts said.

Morgan Stanley raised its price target on Warby Parker ( WRBY ) to $14 from $13 while keeping its equalweight rating.

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