Zscaler (ZS) stock remains in penalty box until further evidence of traction emerges in the security operations business, new sales leader roles are filled, and operating structure improves, Morgan Stanley said in a Wednesday research report.

Fiscal Q3 beat was largely driven by outperformance in Red Canary with core business underperforming, the firm said. The company also highlighted that the new logo pipeline would take effort to rebuild, according to the note.

Challenges with new client acquisition loom amid stiff competition in the secure access service edge sector, analysts wrote.

The brokerage said it reiterated its equalweight rating on the stock and cut its price target to $145 per share from $155.

Price: 125.90, Change: -58.70, Percent Change: -31.80