Shares of big-data software sorter and analyzer maker Splunk (SPLK) - Get Report were rising on Monday after receiving an upgrade from analysts at Morgan Stanley, who see the company's "robust" free-cash-flow potential as having a positive influence on future revenue and earnings.

In a research note to clients, Morgan Stanley analyst Keith Weiss upgraded his rating on the stock to overweight from equal weight and also lifted his one-year price target to $169 from $140 on what he sees as "increasing clarity" in the company's shift toward a recurring revenue model.

The shift "likely reveals a durable 25%+ [annual recurring revenue] growth story, with FY23 FCF approaching $1B - which looks undervalued at current levels," the analyst wrote, noting that Splunk currently trades "at a ~30% valuation discount relative to peers."

The rating upgrade comes ahead of Splunk's fiscal third-quarter earnings to be released on Thursday. Analysts polled by FactSet are currently expecting per-share earnings of 54 cents on revenue of $604.2 million.

Splunk last month rolled out a number of updates to its Data-to-Everything platform in an effort to compete more with the likes of Microsoft (MSFT) - Get Report , Salesforce (CRM) - Get Report , SAP (SAP) - Get Report , Oracle (ORCL) - Get Report and Workday (WDAY) - Get Report in providing more robust software-as-a-service platforms for businesses. 

The 16-year-old data company has been steering its business away from long-term software licensing and toward subscription products, with the platform updates expected to accelerate the shift.

Shares of Splunk were up up 2.27%, or $2.71 a share, at $121.90 in morning trading on Monday. Splunk's stock has been on a rough path this year, trading roughly 7.5% lower since late August. 

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