Resideo Technologies (REZI) delivered "better-than-feared" Q4 results and even 2026 guidance amid a tepid macroeconomic scenario, Morgan Stanley said in a note Wednesday.

The investment firm said it feels "incrementally better" about the company's execution, adding that the results and outlook showed that "two major headwinds to guidance last [quarter] -- the ERP upgrade and HVAC inventory glut -- are largely in the rear-view now."

The brokerage highlighted 5% year-over-year revenue growth guidance for 2026 and a $955 million midpoint for adjusted EBITDA, above the $940 million to $950 million buyside expectation. The firm raised its calendar 2026 earnings per share estimate to $3.12.

Morgan Stanley added that adjusted EBITDA and EPS guidance "exceeded even the most vocal buyside bulls". It said potential catalysts include further earnings revisions, multiple expansion and the planned tax-free spin of the ADI Global Distribution business in H2.

Challenges remain as housing starts and remodeling activity stay soft and tariffs remain in flux, keeping volume growth under pressure. The investment firm also flagged that cash flow from operations is expected to be flat year over year despite revenue growth.

Morgan Stanley raised its price target to $50 from $42 and maintained an overweight rating on the company's stock.

Shares of Resideo were up nearly 14% in recent trading.

Price: 40.68, Change: +4.96, Percent Change: +13.87