EBay stock gained in trading Thursday following a double upgrade from analysts at Morgan Stanley, who see the e-commerce company benefiting from AI-enabled tools on its marketplace.
Morgan Stanley analysts led by Nathan Feather upped their rating on shares of the San Jose-based eBay to overweight, up from a bearish underweight rating. The note set a price target of 62 for eBay, up from 35. In the same note, competitor Etsy was downgraded to underweight from equal weight.
On the stock market today, eBay stock rose 1% to close at 49.95. Etsy stock fell a fraction to close at 67.34.
EBay Stock: AI In Listings
The analysts cited eBay's AI efforts for the upgrade. Last year, eBay launched a tool called magical listing that allows sellers to auto-populate text for sales pages based on an image of the product, among other generative AI powered features.
"We believe eBay is best positioned to capture upside from gen AI in '24, to the extent its seller-focused features drive listing velocity and quality," Feather wrote.
Morgan Stanley's price target is the most bullish among the 32 Wall Street analysts with coverage of eBay, according to FactSet.
The e-commerce firm is due to report first quarter earnings on May 1. Analysts expect adjusted earnings to increase 8% year over year to $1.20 per share. Sales are seen rising just under 1% year over year to $2.53 billion, according to FactSet.
Ebay stock is up about 12% this year. The company's shares gained following a better-than-expected fourth-quarter earnings report in late February.
Last year, eBay stock gained 5%, compared to a 24% increase for the S&P 500. And in January, eBay cut 1,000 jobs, about 9% of its staff, in a restructuring it said was aimed at becoming "more nimble."
The 28-year-old company is battling for share with e-commerce giants Amazon and Walmart. Another competitor is Temu, which is owned by Chinese tech giant PDD Holdings.
But Feather said Temu's momentum in the U.S. market is cresting. That's another potential point in eBay's favor, according to the analyst.
Etsy Stock Downgraded
On the other hand, Morgan Stanley turned more bearish on Etsy, citing concerns about medium-term growth for handmade goods marketplace.
"In addition, margin expansion may be constrained as increased marketing spend is needed to attract and retain incremental buyers," Feather wrote about Etsy.
The Morgan Stanley analysts cut their price target for Etsy to 55, from 64.
Etsy stock is down 18% this year. The company laid off 11% of employees in December. Etsy will also report first quarter earnings on May 1.
