Morgan Stanley Upgrades Zalando to Equal-Weight as Valuation Stabilizes

Morgan Stanley has upgraded German e-commerce giant Zalando SE to an 'equal-weight' rating from its previous 'underweight' stance. The investment bank set a new price target of €23 for the stock, citing a more stabilized risk-reward profile for investors. This upgrade follows a significant period of underperformance, with Zalando's share price plunging nearly 50% over the past year. Analysts noted that the company's valuation, currently at 13x its 2027 estimated price-to-earnings ratio, is now broadly in line with global peers. While competition from AI-driven platforms and social commerce remains a factor, Morgan Stanley suggests the stock's valuation decline has likely reached a floor. The move signals a shift in sentiment as the market reassesses the retailer's position following its substantial market capitalization erosion.