Alteryx stock jumps following Morgan Stanley upgrade amid challenging year

Data analytics software company Alteryx (NYSE:AYX) saw its stock rise by 4.82% on Monday, following an upgrade from investment bank Morgan Stanley. The bank shifted its rating for Alteryx from equal weight to overweight, while maintaining a price target of $54. This positive shift comes after the company's shares experienced a near 30% drop since the beginning of the year.

Morgan Stanley's upgrade is based on Alteryx's growing annual recurring revenue, which is nearing the $1 billion mark. This indicates that the company's software is gaining traction among major corporations globally. Alteryx has managed to penetrate 48% of the Global 2000, demonstrating the value and demand for its services in the market. The firm also emphasized that Alteryx could potentially benefit from streamlining analytics work in the large enterprise market.

However, Alteryx has not been without challenges in recent years. The company's transition to cloud-based operations was slower than anticipated, leading to customer losses during the early stages of the pandemic. These issues contributed to a significant dip in its stock price, which stands at an 80% decrease from its peak in 2020.

In its second-quarter report, Alteryx disclosed a growth of 22% in annual recurring revenue, reaching $890 million. However, reported revenue only saw a modest increase of 4%, amounting to $188 million. This discrepancy is credited to a challenging macroeconomic environment coupled with an ongoing shift to cloud operations, which changes how revenue is recorded.

Despite these hurdles, Alteryx remains a notable entity in the data analytics sector due to its potential profitability and a current price-to-sales ratio of 2.7. However, recent results suggest that a turnaround is not yet evident.

Although Alteryx did not feature on a recent list of top ten stocks recommended for investors, the company continues to be closely watched for signs of recovery and growth.

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