BILL Holdings' (BILL) fiscal 2027 revenue outlook suggests AI has yet to become a meaningful growth driver after the software company delivered a Q4 "profitability bull case," Morgan Stanley said Thursday in a report.

Core revenue growth guidance of 11% to 14% for the full year missed consensus and implies slowing from 16%, the report said. AI adoption is increasing across BILL's platform, though monetization remains at an early stage, Morgan Stanley said.

In Q4, core revenue rose 16% to $400.5 million, topping market expectations, the report said. Non-GAAP operating income climbed 80% to $101.6 million, exceeding estimates, and the operating margin topped 23%, Morgan Stanley said.

BILL's quarterly results combined mid-teens revenue growth with operating margins above 23%, meeting a key profitability benchmark, and management expects margins to improve further in fiscal 2027, the report said.

Morgan Stanley raised its price target on BILL stock to $60 from $55 and maintained its equal-weight rating.

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