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Morgan Stanley Analyst’s Contrarian Calls: eBay Upgraded, Etsy Downgraded
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Morgan Stanley Analyst’s Contrarian Calls: eBay Upgraded, Etsy Downgraded

Story Highlights

Morgan Stanley analyst issued contrarian calls for popular e-commerce stocks, Etsy and eBay.

Out of popular e-commerce stocks, Etsy (NASDAQ:ETSY) and eBay (NASDAQ:EBAY), one of them is a Buy, according to Morgan Stanley analyst Nathan Feather. The analyst upgraded eBay to a Buy from a Sell, and he raised his price target to $62 from $35. The analyst’s price target implies an upside potential of 22.5% from current levels.

When it comes to Etsy, Feather downgraded the stock to a Sell from a Hold, and he lowered the price target to $55 from $64. Feather’s price target implies a downside potential of 17.8% from current levels.

The analyst added that there was a “pair trade opportunity” with these two stocks. A pair trading opportunity is a trading strategy that involves simultaneously buying one stock and selling another within the same sector.

Furthermore, Feather has forecasted eBay’s earnings before interest, tax, depreciation, and amortization (EBITDA) to grow at a compound annual growth rate (CAGR) of 5% between 2023 and 2026. Additionally, the analyst expects that eBay will outperform Etsy as AI-assisted listings will likely boost its sales and margins.

In contrast, the analyst is less optimistic about Etsy as he stated that while the stock performed well during the pandemic, it has now reached a “new level of saturation.” ETSY stock has declined by more than 30% over the past year.

Is eBay Stock a Buy or Sell?

The rest of the Street, however, does not seem to share Feather’s view. Analysts remain sidelined about EBAY stock, with a Hold consensus rating based on seven Buys, 14 Holds, and two Sells. Over the past year, EBAY has increased by more than 15%, and the average EBAY price target of $49.89 implies a downside potential of 1.6% from current levels.

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