Morgan Stanley upgrades Zalando as risk-reward stabilizes

The brokerage said Zalando’s shares have dropped nearly 50% in the last 12 months and now trade at about 13x price-to-earnings on 2027 estimates

Morgan Stanley on Thursday upgraded Zalando SE to “equal-weight” from “underweight,” saying the recent de-rating in the stock has made the risk-reward more balanced.

The brokerage said Zalando’s shares have dropped nearly 50% in the last 12 months and now trade at about 13x price-to-earnings on 2027 estimates.

That compares with the global logistics median of about 14.5x and places the stock toward the bottom end of global eCommerce peers and other retail brand comparables, Morgan Stanley said.

Morgan Stanley set a price target of €23. Zalando shares closed at €22.40 on Feb. 10. The stock has traded in a 52-week range of €40.08 to €20.85 and has a market capitalization of €5,868 million.

The brokerage said it continues to see rising competition for Zalando from social commerce, including TikTok Shop, from recommerce platforms such as Vinted, and from the potential impact of agentic artificial intelligence on the online shopping journey. It said advertising, known as ZMS, accounts for about 20% of adjusted EBIT on its estimates.

Morgan Stanley said it is around 4% below consensus on adjusted EBIT for 2026 and around 8% below consensus for 2027. For 2026, the bank estimates adjusted EBIT of €654 million compared with consensus of €678 million. For 2027, it estimates €756 million versus consensus of €818 million.

Under its base case, Morgan Stanley assumes Zalando will maintain its active customer base, with gross merchandise value growing in the low single digits over the medium term, while losing share in online apparel to social commerce, recommerce and AI-driven platforms.

It values the company using a blended discounted cash flow and price-to-earnings methodology, applying a 14.5x multiple in line with global logistics peers.