Cava has strong growth potential, and Morgan Stanley thinks investors need to capitalize on it. The bank upgraded shares of the fast-casual chain to overweight from equal weight. It decreased its price target to $41 from $45, but the updated forecast still implies upside of nearly 28%. Cava stock has soared more than 45% since the company went public on June 15. While shares are down nearly 30% over the past three months, analyst Brian Harbour foresees a rally ahead. CAVA YTD mountain CAVA price chart “A small early lockup expiration in Sept, presumably some IPO holders selling, and higher short interest has affected CAVA, but we see this pressure lessening,” he wrote. “Valuation on near term numbers is still not immodest, likely a point of pushback, but we are sticking with the framework laid out in our recent initiation, adjusting for discount rates, which still leaves us with ~30% upside.” Harbour pointed to Cava’s strong fundamentals as a catalyst, specifically the restaurant chain’s “best-in-class” store margins that still have upside potential. The analyst also highlighted Cava’s strong self-funded net unit growth — which has a 15% target — and expects growth in both traffic and sales to continue this year. “CAVA has better traffic trends than several peers (helped by new store performance) and we have greater conviction that both AUV [average unit volume]/sales and store margin upside vs expectations can be visible,” Harbour wrote. “Healthier food, workday traffic and favorable demographics amid potential economic uncertainty are relative advantages, in our view.” The analyst also noted the strong track record of success among Cava’s executive team. As an additional catalyst, Harbour pointed to the firm’s strong cash holdings, which have become ultra important as interest rates linger at higher levels. “The company has a clean balance sheet with no debt post IPO, over $300M of cash and we estimate the brand can self fund growth while still generating cash as early as next year,” he wrote. — CNBC’s Michael Bloom contributed to this report.