Cummins (CMI) is offering a rare buying opportunity after a sell-off in its shares following its Q4 results on fears of a slowdown in power systems business, Morgan Stanley said in a Friday note.

"The fears of a slowdown in CMI's power systems were overdone," the note said. "Instead, our analysis suggests material upside to estimates still ahead and a cheap valuation."

The report said power generation demand from data center vertical remained robust, with data center sales coming in at the higher end of its 2025 growth guidance of 30% to 35%.

The note said its power generation sub-segment sales growth guide for 2026 implies data center sales growing in the 30% to 35% year-over-year range yet again.

"CMI continues to offer a rare and cheap investment vehicle with not just Data Center exposure but with material cyclical torque and self-help levers for continued outperformance," it said.

Morgan Stanley raised its price target to $675 from $600 while keeping its overweight rating.

Price: 561.97, Change: +21.61, Percent Change: +4.00