We received a response from the engineering team stating, "This is by design. Teams has never returned the displayName in the app context."
As a workaround, you can authenticate the user and retrieve their name from the auth token using the steps outlined in the following documentation:
https://learn.microsoft.com/en-us/microsoftteams/platform/tabs/how-to/authentication/tab-sso-overview
The engineering team is considering this as a feature request.