BlackLine's (BL) artificial intelligence-driven growth acceleration will likely take time because accounting customers require high levels of "accuracy, controls and auditability," Morgan Stanley said in a report Tuesday.

The investment bank said BlackLine is well positioned to automate finance and accounting processes, but "risk-averse" customers may be slow to expand AI products beyond pilot programs. Early results for "Verity AI" were encouraging, though enterprise customers typically need several quarters to move to broader deployments, according to the report.

BlackLine also faces execution risk as annual recurring revenue is growing by about 9%. The stock could face further valuation pressure if growth remains in the single digits, while "durable low- to mid teens growth" could make its valuation more attractive, the report said.

Morgan Stanley downgraded BlackLine to equal-weight from overweight and lowered the price target to $33 from $50.

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