Morgan Stanley has upgraded Zalando to 'equal-weight' from 'underweight,' citing a more balanced risk-reward profile after the stock's nearly 50% decline over the past year. The brokerage noted that Zalando now trades at approximately 13x price-to-earnings on 2027 estimates, below the global logistics median of 14.5x and toward the bottom end of global eCommerce peers.

Morgan Stanley set a price target of €23 for Zalando, which closed at €22.40 on February 10. The stock has traded between €40.08 and €20.85 over the past 52 weeks, with a market capitalization of €5.87 billion. The firm continues to see rising competition from social commerce platforms like TikTok Shop, recommerce platforms such as Vinted, and potential disruption from agentic artificial intelligence in online shopping.

Morgan Stanley estimates 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 competitors. The brokerage 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. The firm's base case assumes a long-term reported EBIT margin of 6% and a terminal growth rate of 2.5% in its discounted cash flow model.