11:32 AM EDT, 06/07/2024 (MT Newswires) -- Gen Digital ( GEN ) is facing slowing topline growth, margins nearing the peak and higher-for-longer interest rates on its large debt balance, Morgan Stanley said in a note Friday.

The Wall Street firm said it is "not confident" in Gen Digital ( GEN ) ability to sustain net add levels as web traffic for its brands and personal computer data indicate "a more challenged environment."

The company's average revenue per user is expected to stabilize and retention rates to stay at 77% to 78% in the next few years, Morgan Stanley said.

Gen Digital ( GEN ) will have a limited upside for margin expansion as cost synergies from mergers and acquisitions are nearly maximized and increased sales and marketing investments are expected for durable growth, the firm added.

Morgan Stanley downgraded Gen Digital ( GEN ) to equal-weight from overweight and reduced the price target to $27 from $28.

Gen Digital ( GEN ) shares were nearly 5% lower in recent trading.

Price: 24.22, Change: -1.23, Percent Change: -4.82