OVH shares posted one of the strongest gains on the CAC Mid & Small index on the Paris Stock Exchange Tuesday, buoyed by a Morgan Stanley report suggesting that the cloud services provider now offers a more attractive valuation following its recent decline.

As of 3:40 p.m., the stock was up 3.7%, while the broader Paris market was up 0.8% at the same time.

While the stock was trading around EUR14 at the end of last June--supported by the theme of European digital sovereignty in response to the dominance of American tech giants--it recently retraced to the EUR7.55 level, Morgan Stanley noted in its report.

At these levels, the stock now presents a more balanced risk/reward profile, the American bank emphasized, adding that it expects the group to benefit next year from market forecasts that have been significantly revised downward.

At constant exchange rates and scope, the New York-based firm forecasts business growth of approximately 6.7% next year, compared to a consensus of 6.4%.

Against this backdrop, Morgan Stanley has upgraded its recommendation from "underweight" to "equal-weight," maintaining its price target at EUR9.05.