Benzinga | Nov 30, 2021 04:11PM EST

Morgan Stanley Downgrades Jumia To Underweight; Sees 10% Downside

Morgan Stanley analyst Luke Holbrook assumed Jumia Technologies AG (NYSE:JMIA) at Underweight with an $11 price target, down from the Equal Weight the firm's prior analyst assigned to the stock. The price target implies a 10% downside.

* The African e-commerce market is only 1-2% penetrated, and Jumia has "scarcity value," plus it recently raised cash to make it self-sufficient for the near term, noted Holbrook.

* However, the success of its strategic pivot in 2019 away from electronics and towards lower value, more frequently ordered items remains to be seen as heavy investment in marketing and technology is dampening EBITDA margins, stated Holbrook.

* Holbrook also cites Jumia's relatively low GMV growth rates compared to emerging market peers.

* Price Action: JMIA shares traded lower by 10.7% at $12.18 on the last check Monday.