OVHcloud shares posted one of the biggest declines on the Paris market on Wednesday after Morgan Stanley downgraded the stock, saying taht its valuation was "stretched."

At 3:40 p.m., the stock was down nearly 10%, going against the SBF 120 index, which was up over 2.5% at the same time.

In a note, Morgan Stanley said the rally in the stock, which it attributed to hopes surrounding the emergence of a sovereign European cloud, had gone too far too fast.

The broker points out that the stock has risen by 51% this year and nearly 76% since the end of March, although it believes that the issue of data sovereignty in Europe is unlikely to boost results in the immediate future.

Judging the valuation to be "stretched," MS has lowered its recommendation to "underweight" from "in line" until now, but has raised its target price from €9 to €10.15 in light of the stock's recent rebound.

Up over 9%, the stock was one of the best performers on the Paris Stock Exchange yesterday following an upgrade by Stifel analysts.

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