TD Synnex's (SNX) fiscal Q3 earnings should help the stock regain momentum on strength in its Hyve hyperscale-infrastructure business and improving operating margins, Morgan Stanley said Tuesday in a report.

TD Synnex has lagged behind the Standard & Poor's 500 in the past three months despite reporting a May quarter in which revenue rose 31% from a year earlier and EPS climbed 62%, the report said. Morgan Stanley attributed the underperformance partly to weakening sentiment around Hyve, which designs and builds data-center hardware for major cloud providers.

Morgan Stanley expects a strong August-quarter beat and a November-quarter raise, with its EPS estimates about 7% above consensus amid resilient enterprise hardware spending, robust Hyve growth and solid margin expansion.

The market continues to undervalue TD Synnex's medium-term earnings power, driven partly by distribution share gains and a reaccelerating Hyve business, the report said. Morgan Stanley forecasts fiscal 2028 EPS of $31.45, 30% above Wall Street estimates.

The company is scheduled to report results on Sept. 24.

Morgan Stanley cut its price target on TD Synnex stock to $334 from $374 and maintained its overweight rating.

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