Zalando falls after Morgan Stanley cuts rating to 'underweight' on risk factors

ABOUT YOU Holding SE

30/04/2025 08:12

** Shares in Zalando ZALG.DE down 3% after Morgan Stanley cuts to "underweight" from "equal-weight" on rising risk factors

** The broker points to macro/competitive uncertainties for the online apparel sector - such as whether Asia-based fast-fashion retailers could sell more in Europe at lower prices

** Zalando shares have been resilient since U.S. tariffs were announced at the beginning of April, the broker says

** It highlights the stock trades on 31x reported P/E on 2025e, dropping to 24x on 2026e, with a less attractive risk-reward profile than peers

** Additionally, Zalando is paying a premium for About You YOUG.DE acquisition, according to the broker

** It says that the multiples paid implied a significant premium over About You's share price based on consensus estimates, as well as over Zalando's own valuation — even though Zalando, with its higher market share, stronger margins, and better cash generation, would typically be expected to command the premium

** "Bolting two European online apparel companies together is strategically sensible," the broker says about the deal, but flags a "very competitive" digital commerce environment

** Shares at the bottom of German blue-chip index .GDAXI

 (Reporting by Linda Pasquini)

 ((Linda.pasquini@thomsonreuters.com))