By Sam Boughedda
Investing.com — Shares of California-based technology company New Relic Inc (NYSE:NEWR) rose 2% Tuesday after Morgan Stanley analyst Sanjit Singh upgraded the company to overweight from equal weight, raising the price target to $150 from $127.
Singh — who has a 4 out of 5 stars rating on analyst ranking website TipRanks — explained that New Relic, which develops cloud-based software to help website and application owners track performance, has seen several years of market share losses.
However, they now "see New Relic poised to accelerate revenue in 2022 and sustain 20%+ growth thereafter in the $22Bn observability market."
Singh outlined three reasons for the rating change: new leadership that is more cloud-focused, an improved technology platform with the introduction of New Relic One, and a business model transition from a subscription to a consumption-based model.
"The company has already shown momentum in recent quarters. With accelerating growth and expanding margins in an increasingly strategic product category, we think shares offer compelling value," concluded the analyst.