TD Synnex (SNX) is expected to benefit from long-term information technology spending and its exposure to cloud infrastructure capex through Hyve amid an increasingly complex IT ecosystem, Morgan Stanley said in a note Wednesday.

The firm noted the company's nearly 70% exposure to faster-growing data center-oriented technologies and growing mix of business in emerging markets. These factors, together with cost efficiencies and compelling free cash flow conversion, drive the company's topline growth and operating margins in excess of core distribution peers, according to the note.

Morgan Stanley said it believes the market is undervaluing the stock at just 9 times its above-consensus 2026 EPS forecast of $13.78. The firm also expects TD Synnex's operating margins to exceed peers by 5 basis points to 10 bps by fiscal year 2028.

Morgan Stanley initiated coverage of the stock at overweight and a $145 price target, with a potential 15% upside.

Shares of TD Synnex were up 1.2% in recent trading Wednesday.

Price: 127.76, Change: +1.54, Percent Change: +1.22