Morgan Stanley downgrades Auto Trader to 'underweight'

"We see a mismatch between relative share strength and near-term Deal Builder growth, combined with relaxed sentiment around Google's entry into the UK," it said.

Morgan Stanley said it sees market/consensus expectations as skewing optimistic on near-term Deal Builder monetisation, while the market seems much more relaxed above the competitive threat from Google in cars than that from CoStar in real estate.

"As a result, AUTO now trades at a premium to Rightmove, which we do not see as warranted given similar revenue/EPS growth trends," it said.

"There is no change in our overall view of Auto Trader as a business, arguably the best-in-class car vertical operator in Europe. There is a long-term bull argument to be made around Deal Builder, but timing is not right yet, in our view."

Within European classifieds, the bank’s preferred names remain Schibsted, which is its top pick, and Rightmove, which it sees as having more uncertainty/risk priced in.

At 1055 BST, Auto Trader shares were down 4.2% at 723.60p.