On Thursday, Amplitude Inc (NASDAQ:AMPL), a digital optimization company, received a downgrade in its stock rating by Morgan Stanley (NYSE:MS) from Equalweight to Underweight. The firm also set a price target for the company's shares at $12.00.
The downgrade was prompted by concerns over an increasingly competitive landscape and macroeconomic pressures.
"While near-term estimates are de-risked, an increasingly competitive landscape coupled with shares closing the historical discount to the SaaS group support more cautious positioning," said the analysts.
Morgan Stanley noted that Amplitude's shares have re-rated to close the historical valuation discount compared to the broader Software as a Service (SaaS) group. However, concerns remain regarding macroeconomic factors, competition, and execution risks that could potentially limit the company's upside. The firm expects budget prioritization to shift away from less mission-critical spending due to macro pressures in the technology customer base.
Looking ahead, Morgan Stanley foresees long-term risks for Amplitude stemming from increased competition, particularly from platform vendors such as Google (NASDAQ:GOOGL) and Adobe (NASDAQ:ADBE). This competitive environment is seen as a threat to Amplitude's future growth prospects. In light of these factors, Morgan Stanley has moderated its forecast for the fiscal year 2025 and beyond, while maintaining the $12.00 price target for the company's stock.
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