TLDR
- Morgan Stanley upgraded ServiceTitan (TTAN) to Overweight from Equal-weight with a $131 price target, naming it a top pick
- The stock trades at more than a 25% discount to comparable vertical software companies when adjusted for growth
- Morgan Stanley raised estimates above consensus, citing improving momentum and stronger execution across the business
- Earlier concerns about valuation, commercial segment expansion, and go-to-market efficiency have now turned positive
- Fourth-quarter outperformance and fiscal 2027 guidance above consensus could serve as near-term catalysts
Morgan Stanley changed its tune on ServiceTitan. The firm upgraded the stock to Overweight from Equal-weight on January 20, 2026.
ServiceTitan, Inc., TTAN
The price target moved to $131 from $125. Analyst Josh Baer now calls it a top pick.
ServiceTitan trades at a steep discount. The stock sits more than 25% below comparable vertical software companies on an EV/Gross Profit basis when adjusted for growth.
Morgan Stanley says it now has higher confidence in the fundamentals. The firm sees improving momentum across the business. Estimates were lifted above consensus.
The broker’s view shifted materially. About a year ago, Morgan Stanley initiated coverage with an Equal-weight rating. Back then, it saw ServiceTitan as well run but fairly valued.
Three main concerns weighed on the earlier rating. High expectations, the challenge of replicating residential success in commercial markets, and go-to-market efficiency all raised questions. Morgan Stanley is now constructive on all three issues.
What Changed Morgan Stanley’s Mind
Valuation improved as a key factor. The pace of expansion in the commercial segment picked up. Go-to-market efficiency also got better.
Morgan Stanley pointed to several growth drivers. The company operates in large and expanding markets. It has strong competitive differentiation and clear market leadership.
The track record of innovation and execution stands out. Multiple growth vectors exist. Unit economics remain solid.
Near-Term Catalysts and AI Positioning
A fourth-quarter outperformance could act as a near-term catalyst. Morgan Stanley also flagged the possibility of fiscal 2027 guidance coming in ahead of consensus.
The firm described this as an uncommon but attractive setup for software stocks. The analyst argued the discount is unwarranted given the durability of growth and the execution track record.
Morgan Stanley highlighted the company’s position in data and AI. This represents a longer-term advantage. The differentiated data and software footprint can reinforce the competitive moat.
The combination of sustained growth and margin expansion underpins the higher price target. Morgan Stanley raised its bull-case view as well.
The balance of outcomes now strongly favors upside. The firm sees a bull-bear skew of better than 5:1.
Needham also maintains a Buy rating on the stock. Their price target sits at $140, set on January 14.
Corporate insider sentiment is negative on the stock. Over the past quarter, 68 insiders increased their selling of TTAN shares compared to earlier in the year.
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