EBay Inc. shares fell in early trading Tuesday after Morgan Stanley lowered its rating and price target, based on signs of weakness in international marketplaces, lower spending from buyers and increasing competition from Amazon.com Inc.
Morgan Stanley analyst Brian Nowak downgraded the shares to underweight from equal weight, and reduced his price target to $22.50 from $24 with a bear case of $16. EBay shares fell 2.5 percent to $24.68 at 8:30 a.m. in New York. They are up 7.8 percent in the past year.
“Our cautious call is based on emerging weakness at EBay’s International marketplaces,” according to the note. "We see particular signs of erosion in the U.K. and Germany. At a high level, marketplace growth is driven by buyers and more spend per buyer... and we see forward risk to both of these factors."
EBay’s struggles in Europe are also driven by competition from Amazon Prime, Nowak wrote.
Chief Executive Officer Devin Wenig, who took over at EBay in July after its split from transactions business PayPal, is trying to address sluggish growth and loss of market share to Amazon. But some investors are skeptical of the company’s “structured data initiative” -- a strategy started in June that involves organizing items into a catalog shoppers can easily search using filters such as price, features and condition. The stock has been volatile over the past year, rising as high as $29.59 in November and dropping as low as $22.01 in February.
EBay has 14 buy ratings, 28 hold ratings and 3 sell ratings from analysts surveyed by Bloomberg.