Baltic Classifieds Group PLC slumped on Tuesday after JPMorgan downgraded the shares to 'underweight' from 'overweight' and slashed the price target to 630p from 770p as part of a broader note on global online classifieds.
JPM said the rapid adoption of Generative AI among consumers is starting to impact established online classifieds models.
It noted that for the past decade, online classifieds players have relied on the network effect to drive traffic leadership, low customer churn/ pricing power, and eventually high margins and high multiples.
"From here though, we argue that incumbents will have to materially increase their efforts to maintain their gatekeeper position by delivering undisputable, top-notch, now AI-driven search experiences and relevant information to compete with GenAI agents and new aggregators," it said.
In Europe, following a reset of margin estimates across most players, JPM said it believes that only Scout24 and SMG - both of which are rated 'overweight' - are positioned to outperform from here.
The bank said it sees further downside in Baltic Classifieds Group and Vend, both of which it downgraded to 'underweight' from 'overweight', Hemnet - which it cut to 'underweight' from 'neutral' - and AutoTrader and Rightmove, which it maintained at 'underweight'.
"In Australia, we continue to see value in CAR and SEEK (both OW), and maintain our high-conviction call on US peer CoStar Group (OW)," it said.
At 1015 GMT, Baltic Classifieds shares were down 4.5% at 222.00p.