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Investing.com - Morgan Stanley (NYSE:MS) lowered its price target on Zalando SE (ETR:ZALG) (ETR:ZAL) (OTC:ZLNDY) to EUR25.50 from EUR28.50 while maintaining an Underweight rating on the European e-commerce company, which currently has a market capitalization of $8.27 billion. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis.
The investment bank cited concerns about the global rise of social commerce and specifically highlighted the potential impact of TikTok Shop’s expansion into Europe on existing apparel marketplaces like Zalando.
Morgan Stanley reduced its 2025-2027 EBIT forecasts for Zalando by 3%, reflecting these competitive pressures on the company’s future earnings potential.
The firm believes investors currently underappreciate the competitive threat that social commerce platforms pose to established e-commerce players in the apparel sector.
The price target reduction represents a downward revision of approximately 10.5% from the previous target of EUR28.50.
In other recent news, Morgan Stanley analysts have downgraded Zalando SE’s stock rating from Equalweight to Underweight. This decision was led by analyst Luke Holbrook and is based on concerns over the competitive landscape and macroeconomic factors affecting the online apparel market. Despite a recent 3% increase in Zalando shares following tariff announcements, the analysts believe the risk-reward profile for Zalando is less attractive compared to its peers. They have maintained a price target of €28.50, suggesting a 19% implied downside to the current share price. The stock currently trades at a price-to-earnings ratio of 31 times based on 2025 estimates, expected to decrease to 24 times by 2026. The Morgan Stanley team has explored a potential combination of Zalando with About You, another online fashion retailer, indicating a valuation range of €18 to €40 per share. This analysis reflects cautiousness regarding Zalando’s future performance, particularly due to potential competition from new entrants from Asia. The downgrade reflects concerns over Zalando’s market share and profitability in the European market.
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