UPDATE: Morgan Stanley Upgrades Splunk Inc.

In a note released Monday morning, Morgan Stanley analyst, Keith Weiss upgraded shares of Splunk Inc.

from Equal-weight to Overweight and announced a $66 price target. Weiss commented, "As a 'Bid Data pure play, Splunk benefits from strong secular tailwinds and significant market momentum." As evidence of this momentum. Weiss cited Splunk's ~40 percent year-over-year growth in sales capacity, second quarter billings acceleration despite price cuts, a good deal of the top-line upside in the second quarter flowed into operating margins. Looking ahead, Weiss expects the upcoming user conference and analyst day to serve as a catalyst and is placing a "high probability" on his bull case (sustained 50 percent FCF growth). Amid the upgrade, Splunk shares are trading up almost four percent in Monday's pr-market session.