01:16 PM EDT, 07/17/2024 (MT Newswires) -- Demand trends for infrastructure software during Q2 likely were little changed sequentially, and with the companies unlikely to boost their prior forecasts for H2, attractive setups for investors will be hard to find, Morgan Stanley said in a research note.

Citing conversations with the companies and customers, the Morgan Stanley analysts said that while a handful of infrastructure software firms, including DataDog ( DDOG ) and JFrog ( FROG ) , could revise their H2 outlooks higher, not many in the sector will issue positive surprises for the rest of 2024.

Dynatrace ( DT ) and Appian (APPN) also may provide more favorable risk-reward dynamics for investors through accelerating growth. The analysts like Atlassian ( TEAM ) longer-term and expressed confidence the automation software firm can continue recent momentum by growing 20% or more and deliver a 25% year-over-year increase in free cash flow over the next three years.

However, despite its positive outlook and reiterated overweight rating, Morgan Stanley still trimmed its price target for Atlassian ( TEAM ) to $225 from $245.

Conversely, the firm raised price target for counterterrorism software company Palantir Technologies ( PLTR ) to $20 from $12, but kept underweight rating. They said Palantir ( PLTR ) could soon raise H2 outlook, but cautioned those expectations for are already baked in to its stock with Palantir ( PLTR ) shares outperforming their peers--a 24% rise over the past three months compared with a mean 2% rise for larger-cap peers.

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