Kornit Digital's (KRNT) Q1 guidance is a clear step in the "right" direction after inconsistent execution in 2025, Morgan Stanley said in a Wednesday note.

The note said the guidance shows it is making progress in improving execution, ramping up its operating expenditure-based delivery model, and onboarding new customers.

Still, it does not represent an inflection point, the note said.

"The faster the company accelerates shifting customers to an opex (i.e. ratable over time) model over the traditional capex (i.e. pay up front) model, the greater the revenue headwind becomes," the report said.

The report said companies undergoing business model transitions face greater variability in outcomes, and thus see limited multiple expansion.

"When this inflection point becomes clearer to us, we will get more vocally positive as we still believe in the long-term story at

Kornit, but we don't expect that catalyst to come until 2027 at the earliest," the note added.

Morgan Stanley retained its equal-weight rating on the stock while raising its price target to $17 from $15.

Price: 16.83, Change: -0.36, Percent Change: -2.07