Doximity (DOCS) could face near-term pressure from slowing growth after issuing weaker-than-expected guidance, though strong user engagement trends and expanding artificial intelligence opportunities continue to support the stock's long-term outlook, Morgan Stanley said in a note Thursday.

The company reported fiscal Q4 revenue of $145 million, up 5% from a year earlier and slightly above Wall Street estimates. However, the company guided fiscal Q1 revenue below Wall Street estimates and forecast fiscal 2027 revenue growth of 4% at the midpoint, disappointing analysts who expected stronger trends in the healthcare digital advertising market, according to the note.

The investment firm said the stock could remain in the "penalty box" in the near term, as it cited several "positives that will likely get overlooked," including a roughly 30% increase in active prescribers using Doximity's workflow tools to more than 800,000 users.

The firm also cited early traction for the company's AI search product, which won deals with top pharmaceutical companies within weeks of launch.

Morgan Stanley lowered the price target on Doximity to $35 from $49, while maintaining an overweight rating.

Shares of Doximity were falling more than 26% in late morning trading Thursday.

Price: 17.24, Change: -6.15, Percent Change: -26.29