ADT's (ADT) lower-than-expected 2026 earnings and revenue outlook is indicative of a potentially deteriorating environment, Morgan Stanley analysts said in a Monday note.

ADT expects 2026 revenue and adjusted EPS growth to be flat, missing Wall Street expectations of 4% and 6%, respectively, Morgan Stanley said.

Analysts said that ADT's long-term framework is "encouraging", but noted that investors will be sceptical considering the muted 2026 outlook.

Morgan Stanley said that ADT's strategic update focuses on key levers within products, service, and customer acquisition, areas that have already been the company's targets.

Analysts said that while they are cautious on ADT's growth outlook and the company faces a competitive environment, it has a recurring revenue base that provides it with a cushion, valuation support, and an improving free cash flow profile that value investors could find attractive.

Morgan Stanley retained an equal-weight rating on the stock, but lowered its price target to $7 from $9.

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