Etsy downgraded to Underweight from Equal Weight at Morgan Stanley

Morgan Stanley downgraded Etsy (ETSY) to Underweight from Equal Weight with a price target of $55, down from $64. U.S. e-commerce is growing 8% annually, but the largest players are taking outsized share, the analyst tells investors in a research note. The firm says Etsy’s limited frequency growth makes it increasingly bearish on the company’s medium-term growth trajectory. In addition, Etsy’s margin expansion may be constrained as increased marketing spend is needed to attract and retain incremental buyers, contends Morgan Stanley. The firm sees a pair trade with Overweight eBay (EBAY) and Underweight Etsy, saying the growth profiles of the businesses “seem to be converging.”