Amentum (AMTM) is poised to benefit from emerging opportunities in the commercial nuclear power sector, a factor that Morgan Stanley said could help bridge part of the company's shortfall against its long-term revenue growth targets.

The company plays an important role in the commercial nuclear sector with its significant capabilities, the brokerage said in a Wednesday note, adding that investors are beginning to view Amentum as an underappreciated commercial nuclear play.

Morgan Stanley said the company has been tracking below its stated goal of about 4% to 6% annual revenue growth for fiscal 2025 to 2028, and that an acceleration in commercial nuclear work could help close part of that gap.

The investment firm estimates that the company can generate about $500 million to $1 billion in total revenue over the life of a large new nuclear power plant project, with upfront annual revenue of about $50 million to $100 million, which is higher than its original expectations.

Amentum has not won every contract in the US nuclear industry despite its established presence, but it has historically had stronger success rates in the UK, one of its key focus markets, according to the note.

Morgan Stanley upgraded the company's stock rating to equal-weight from underweight and raised its price target to $35 from $20.

Shares of Amentum were down more than 2% in recent trading.

Price: 29.36, Change: -0.65, Percent Change: -2.15