Compass (COMP) and Revolve Group (RVLV) have more upside compared with MNTN (MNTN) and Opendoor Technologies (OPEN) after the cloud-based companies disclosed their recent financial results, Morgan Stanley said in a Wednesday note.
According to the note, Compass delivered strong Q2 results supported by continued gains in market share and the achievement of its synergy target five months early. The company also raised its one-year synergy target to $330 million from $300 million and its expected 2026 realized synergies to $220 million from $200 million.
This led Morgan Stanley to raised its 2026 and 2027 EBITDA estimates by 8% and 3%, respectively, the analysts said.
Meanwhile, despite Revolve's encouraging growth, Morgan Stanley said the company is seeing near-term negative pressure due to its heavy investment spending. Its plan of focusing on medium-term investments is expected to lead to a strong fiscal 2027 with improving revenue and rebounding margins, the note said.
Morgan Stanley analysts also said they are encouraged by MNTN's product innovation, AI strategy and improving profitability but are waiting for proof that these will translate into a "more meaningful" acceleration in customer growth and adoption among small and medium-sized businesses.
For Opendoor, the analysts still see execution risk as the company works to grow its sales volumes while maintaining its margins in a tough housing environment.
Morgan Stanley maintained the stock rating of the four companies at equal-weight. Compass' price target was increased to $14 from $12.50, while Revolve's price target was raised to $29 from $27. MNTN and Opendoor's price targets were kept at $18 and $5.50, respectively.
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