Terex's (TEX) pro-forma portfolio after its REV Group buyout remains "underappreciated," with an attractive risk/reward profile, Morgan Stanley said Tuesday in a report.

The company reported Q4 earnings that topped Wall Street estimates, supported by 32% bookings growth bookings, the report said. Stronger-than-expected margins and broad-based order strength reinforced the view that the stock's valuation remains highly discounted and that the earnings backdrop for 2026 is more favorable than the market anticipated, Morgan Stanley said.

A discounted cash flow and sum-of-the-parts analysis indicates upside potential for Terex beyond its base-case valuation, the report said.

Terex's solid Q4 performance should continue to highlight the "notable mismatch" between the company's updated product portfolio after the buyout and its relatively cheap valuation, the report said.

Morgan Stanley raised its price target on Terex stock to $83 from $64 and reiterated its overweight rating.

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