01:16 PM EST, 01/06/2025 (MT Newswires) -- ServiceTitan ( TTAN ) has a strong competitive position in a sizable and growing market with the potential to expand as the company introduces new products and enters adjacent trades, Morgan Stanley said in a note on Monday.

ServiceTitan's ( TTAN ) ability to replicate its success in residential markets within the $260 billion commercial service and replace market, along with increased adoption of its Pro product, are key drivers of its long-term growth algorithm, the firm added.

Morgan Stanley noted the company has achieved significant operating leverage, supported by a low churn rate of 95%, high incremental margins, and scaling efficiencies.

Management forecasts operating margins to surpass 25% long-term, with the potential to reach 30% as the business scales further, the note added.

"ServiceTitan's ( TTAN ) powerful and varied growth vectors should lead to durable growth, and strong unit economics should yield steady margin expansion," Morgan Stanley added.

The firm initiated the rating on ServiceTitan's ( TTAN ) stock at equal-weight with a price target of $104.

Shares of ServiceTitan ( TTAN ) were down nearly 4% in recent trading.

Price: 101.63, Change: -4.17, Percent Change: -3.94