Morgan Stanley lowers value of Google, Facebook, LinkedIn and other key internet companies

Stocks move from "attractive" to "in-line" in new judgement

Financial services firm Morgan Stanley has lowered its industry view on the stocks of internet companies, downgrading the likes of Facebook, Google and LinkedIn from "attractive" to "in-line".

Google itself has been removed from the firm's "Best Idea List" - Morgan Stanley's top list of purchaseable stock due to the fact its "catalysts had played out".

Morgan Stanley said its reasoning was based on a belief that investors have been looking at the total addressable market (TAM) opportunity in internet company shares, without paying much attention to risks.

Analysts wrote in a client note on Monday that "there may not be enough TAM for all of our companies to achieve long-term estimates".

"In our view, stocks trading at a premium because of a significant TAM opportunity face strong pullbacks even when meeting or guiding at reasonable expectations of growth," they wrote.

However, Morgan Stanley still rates some companies - among them eBay, Amazon, LinkedIn, Facebook, Groupon and Priceline.com - as "overweight" in terms of their buy versus sell potential.

"While we still believe that our overweight-rated stocks hold upside, we find overall valuation for the entire group to be unflattering," stated Morgan Stanley.

Twitter was not directly mentioned in the devaluing, after the company's largely successful transition to a public company last week. Despite having $5.5bn (£3.47bn) wiped from its value as share prices hit a low of $40.685, stock in Twitter is still vastly exceeded the $26 each of the 80.5 million shares was initially offered at.