⌛ Did you miss ProPicks’ 13% gains in May? Subscribe now & catch June’s top AI-picked stocks early.Unlock Stocks

Morgan Stanley issues a double upgrade on eBay while downgrading Etsy

Published 18/04/2024, 13:44
© Reuters.

In their latest note on the US e-commerce sector, Morgan Stanley analysts said they double upgraded eBay (NASDAQ:EBAY) to Overweight from Underweight and demoted Etsy (NASDAQ:ETSY) to Underweight from Equal Weight, citing “growth convergence.”

“We prefer to play marketplaces tactically once scaled and try to identify points of inflection, which we see happening at EBAY with GMV, adj. EBIT margin, and adj. EPS all accelerating,” analysts wrote.

Morgan Stanley notes that eBay is currently shifting its strategy from a focus on category-specific enhancements toward broader, site-wide solutions that incorporate more proactive innovation.

They believe eBay is also developing a pipeline of general AI features, signalling a strategic evolution in its approach to enhancing the platform's capabilities.

“We are turning more positive as we believe the shift to more horizontal solutions such as AI-assisted listings can enable a balance of slight GMV acceleration while maintaining or expanding margins,” they said.

EBAY shares rose 3.6% ahead of Thursday's market open.

For ETSY, the downward revision comes amid limited growth in transaction frequency that contributes to a more bearish outlook on the company's medium-term growth prospects, said analysts.

They now project a modest Gross Merchandise Sales (GMS) compound annual growth rate (CAGR) of approximately 3% from 2023 to 2026. Moreover, margin expansion could be hindered “as increased marketing spend is needed to attract and retain incremental buyers,” analysts noted.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.