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Investing.com — Jumia Technologies AG (NYSE:JMIA) shares fell 10% after Morgan Stanley analyst Luke Holbrook downgraded it to underweight and assumed coverage of the stock.
The previous rating by another analyst was equal weight.
Holbrook set an $11 price target, saying the African e-commerce market is only around 1% to 2% penetrated, with Jumia having “scarcity value. In addition, he noted that the company recently raised funds to make it self-sufficient in the near term.
However, the analyst said in a research note that the success of a 2019 pivot away from electronics and toward lower value more frequently ordered items is still unknown as an investment in marketing and technology is affecting earnings margins.
Holbrook also noted gross merchandise value growth rates compared to competitors as a reason for the downgrade.
