The S&P 500 is masking a hidden market pullback. Why Morgan Stanley says an index retreat would signal a buying opportunity.
Since mid-summer portfolio managers have been emphasizing free cash flow, profitability, high margins, strong balance sheets and stable earnings when stockpicking.
Morgan Stanley has upgraded Global-E Online Ltd's stock rating from Equalweight to Overweight, raising its price target from $46.00 to $50.00. Analysts note that same-store-sales growth at Global-E Online remains in the mid-teens or better, exceeding historical performance of 10% to 12%. Management expects this outperformance to gradually moderate due to various factors including fading foreign exchange benefits, strengthening Canadian comparisons, waning promotional activity, and normalization of annualization benefits from new merchants.
However, the firm remains optimistic, projecting net dollar retention of 125%, 123%, and 121% for 2026 to 2028, up from previous estimates of 120%, 120%, and 118%. Morgan Stanley highlights that same-store-sales growth at or above 12% would likely provide confidence for incremental 30%+ gross merchandise value growth, especially as Managed Markets expands.
The firm's durable EPS growth is expected to reach 30% or more, supported by factors such as increased take rates, better gross profit growth, and scaling Managed Markets GMV. Recent strong second-quarter results, with $2.09 billion in gross merchandise volume, $299 million in revenue, and $62.4 million in adjusted EBITDA, outpacing consensus estimates by 44%, 39%, and 62%, respectively, have bolstered the positive outlook.
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