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Sat. Jul 20th, 2024

Ionos loses all-buy status as Morgan Stanley sees risks ahead

By Vaseline May27,2024

(Bloomberg) — Ionos SE’s days as a buy-rated stock are over.

Morgan Stanley downgraded the German web host to equal weight after a stellar six months for the stock, citing concerns about growth risks and earnings quality.

The rating downgrade is the first by an investment bank since last year’s IPO. After an initially disappointing debut, Ionos shares rallied, boosted by upgrades from major brokers like Morgan Stanley and JPMorgan Chase & Co. The stock is up more than 80% in the past six months.

Analysts led by George Webb are now turning more cautious, saying they view Ionos as a riskier investment after the stock’s strong run, especially after this month’s first quarter results, while the valuation gap with US-based GoDaddy Inc. is no longer so spectacular. .

“A sharp increase in sequential absolute earnings is needed, and we think the volatility could focus investors on the earnings quality of the domain parking sector,” they wrote in a note.

©2024 BloombergLP

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