Kornit Digital's (KRNT) is expected to face slower growth over the next year or two as it shifts from selling digital textile printing equipment upfront to a subscription-like model, Morgan Stanley said Thursday in a report, downgrading the stock to equal weight from overweight.
While Kornit's Q3 results topped expectations, guidance for Q4 revenue and 2026 sales fell short of estimates, the report said.
Morgan Stanley lowered its 2026 revenue forecast for Kornit to $212 million from $220 million and cut its valuation estimate, citing execution risks and slower growth. The firm also reduced its 2025 revenue estimate to $208 million.
Kornit's long-term prospects remain attractive, Morgan Stanley said, citing the potential of platforms such as Apollo and Atlas MAX, which offer faster print speeds, higher automation, and improved image quality for on-demand textile production.
Near-term valuation upside is limited as the company transitions its business model and navigates execution risks, the report said.
Broader adoption of Apollo and Atlas MAX, or a meaningful rebound in sales to major customers such as Amazon.com (AMZN) may improve the outlook and reaccelerate growth, the report said.
Morgan Stanley lowered its price target on Kornit stock to $15 from $20.
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