F5's (FFIV) AI-related business story is compelling, but the recent systems breach suggests a wait-and-see position for the company's stock, Morgan Stanley said in a Tuesday note.

The breach has caused a valuation reset and a potential investment opportunity, the note said, adding that early signs indicated that the breach mitigation is being managed well.

"Given AI story, see FFIV at an attractive entry point, but see little risk in waiting until change in CY to gather residual impacts," the report said.

The analysts said they see an interesting opportunity to re-rate the stock in 2026 based on the increasing number of the company's AI-related use cases such as AI data delivery, runtime security, and AI Factory load balancing.

Morgan Stanley kept its equal-weight rating while reducing its price target to $336 from $352.

Price: 263.74, Change: -26.68, Percent Change: -9.19