Data#3 shares lift as Morgan Stanley upgrades it to 'overweight'
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The news: Data#3 shares gained in morning trade as Morgan Stanley analysts upgraded their rating on the stock, following a 25% reduction in the tech company's share price since February.
The numbers: Shares in the IT services provider were up 4.6% to $7.76 by 11:45am AEST.
Morgan Stanley analysts upgraded the stock from 'equal-weight' to 'overweight' and hiked their price target from $8.10 to $8.40.
The context: The analysts noted that Data#3 now carried a less demanding valuation, after seeing its share price climb down 25% from record highs earlier this year.
They also expect Data#3 to benefit from a positive services outlook, supported by a wider trend of disaggregation of large contracts, as well as a more resilient government and enterprise customer exposure.
Additionally, they noted a "bull case upside" for the company from "AI tailwinds" over the medium term, with AI spend being incremental to existing IT budgets and market share gains through Data#3's growing pipeline of AI projects.
The source: Morgan Stanley research
