GMR Solutions (GMRS) is well positioned to capitalize on margin expansion opportunities in a "challenging" US emergency medical services market, though investors may need "several quarters" of consistent execution before sentiment improves, Morgan Stanley said in a note Monday.

The investment firm highlighted GMR's leadership position in ground and air emergency medical services, serving about 1,400 counties and roughly 200 million Americans. An aging population and rising prevalence of chronic conditions are expected to support long-term demand for EMS services, Morgan Stanley said.

The note pointed to margin expansion opportunities, strong free cash flow generation, and a robust acquisition pipeline in a highly fragmented EMS industry, with the firm expecting cash flow growth to support deleveraging and future mergers and acquisitions.

Despite its market leadership and growth prospects, the firm said GMR remains a "show me" story amid a challenging healthcare environment and weak investor sentiment, warning that operational missteps could weigh on the stock.

Morgan Stanley initiated GMR Solutions with an equal-weight rating and a $14 price target.

Shares of GMR Solutions were up more than 2% in Monday trading.

Price: 11.14, Change: +0.24, Percent Change: +2.20