A little more than a week ago, Morgan Stanley kneecapped Demand Media’s stock by downgrading the Santa Monica, Calif., online content company’s prospects.

Some worries: Pressure from algorithm-tweaking Google, upon which Demand relies heavily for traffic; worrisome drops in said traffic due to said tweaking; and not enough uptake on higher-quality, premium stories the company had promised in the fall.

Demand shares fell 6.5 percent that day, to close at $5.93.

It has recovered a bit to $6.13 today, but is still off almost 8 percent since the beginning of the year, and 71 percent from a year ago.

One irony to the tough call by Scott Devitt, of course, was that Morgan Stanley was the investment bank that had taken Demand public in January of 2011, at $17 a share.

In addition, the recent departure of three of the company’s six founders has also worried investors.

All this will presumably be on display today when Demand reports its fourth-quarter earnings. Wall Street analysts are expecting Demand to earn seven cents a share on an adjusted basis on an expected $81.95 million in revenue.

We’ll see after the market closes, as well as what its execs have to say about the key metrics of costs and traffic.

Stifel Nicolaus analyst Scott Devitt thinks the rally has gotten a bit out of hand; he downgraded the shares this morning to Sell from Hold, asserting that fair value is about $28, or well below the current level.

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Stifel Nicolaus analyst Scott Devitt this morning upped his rating on Netflix (NFLX) to Buy from Hold, setting a $25 target price. Devitt notes that the stock is off 40 percent since late September, a period in which the S&P 500 is off 25 percent.

“In the current economy,” he writes, “Netflix’s value-oriented offering stands out to us as a compelling alternative to more expensive entertainment alternatives.” Devitt notes that the average Netflix customer paid a base of $13.60 a month–$163.20 a year–for two-at-a-time unlimited DVD rentals. By contrast, he notes that a night at a “Ticketmaster event” for a family of four on average runs $240. Take a family of four to the movies and ply them popcorn and soda, and you’ll pay $70. “Due to its relative value, we believe the Netflix existing subscriber base may remain more stable in the downturn and new subscribers could improve once the initial shock of the past few months subsides.”

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Devitt says the company has had two consecutive quarters of mid-20 percent growth, but that it has had “fairly easy comps,” and that growth could drop into the low-to-mid teens by 2009. “Investors believe that Overstock is doing well for the same reasons TJ Maxx is doing well, but Overstock transitioned away from the excess market two years ago and sells more traditional retail merchandise in its current form,” he writes.

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Stifel Nicolaus analyst Scott Devitt asserts in a research note this morning that he has “thought it possible for Microsoft to attain an equity ownership interest in PayPal/Skype.” He notes that display ads for Microsoft’s program for providing cash back to consumers who make purchases through MSN have shown up on eBay, and that all of eBay’s fixed price items qualify for the program. He also notes that the cash-back program offers PayPal deposit of refunds.

Manwhile, Devitt this morning upped his rating on eBay to Buy from Hold; he maintains his $35 price target on the stock.

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But for a variety of reasons, this seems like a long shot idea. Scott Devitt, an analyst at Stifel Nicolaus, says bluntly, “not a chance.”

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