Updates with Morgan Stanley comments

** Morgan Stanley says e-commerce operations will underpin next phase of growth for Australia's Wesfarmers WES.AX

** Notes co aspires to double revenue, earnings from e-commerce operations, through its retail chain K-MART

** Adds co's focus on increasing sales productivity, cost efficiencies

** However, warns co's lithium business will undergo transitional period in FY26, with losses set to be higher than in FY25

** Citi lowers PT to A$60.00 from A$61.00; retains "sell"

** Cuts its EBIT forecasts by 1% and 3% for FY25 and FY26, respectively

** Sees lithium prices dropping; flags further downside risk if prices don't recover

** WES falls 0.5% to A$82.71

** YTD, stock gains 15.7%

(Reporting by Rishav Chatterjee and Nichiket Sunil in Bengaluru)

((Nichiket.Sunil@thomsonreuters.com;))