** Morgan Stanley upgrades its sector view on European business services to "attractive" from "in-line" based on strong M&A growth optionality and high U.S. revenue exposure

** Its preferred sub-sectors are credit bureaus, testing & inspection and distribution

** It is more cautious on staffing and facilities management, where it sees unattractive end-markets and downside risks to earnings

** MS names credit data firm Experian EXPN.L its top pick citing robust outlook for growth and margins

** It remains positive on Bureau Veritas BVI.PA, Diploma DPLM.L and Azelis AZE.BR; it is cautious on Adecco ADEN.S, Securitas SECUb.ST and Eurofins EUFI.PA

** It downgrades ISS ISS.CO to "underweight" on risks from weaker organic growth and margin deceleration in 2025

** MS cuts Hays HAYS.L to "underweight" due to limited FCF generation and a risk of dividend cut, and after a profit warning from peer SThree STEMS.L

** It upgrades Ferguson FERG.N to "overweight" on U.S. exposure and indications of improving underlying end-markets through H2

** It sees scope for binary but material outcomes for Teleperformance TEPRF.PA and companies exposed to U.S. construction like Ashtead AHT.L, Ferguson and Rentokil RTO.L

MORGAN STANLEY RATINGS:

(Reporting by Marta Frąckowiak)

((marta.frackowiak@thomsonreuters.com))