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 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 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 stock at equal-weight with a price target of $104.
Shares of ServiceTitan were down nearly 4% in recent trading.
Price: 101.63, Change: -4.17, Percent Change: -3.94
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