eBay Inc Receives Mixed Reviews From Analysts After Earnings


eBay Inc (NASDAQ:EBAY) stock got a mixed reaction from Wall Street analysts, after the company posted better-than-expected first-quarter results, but dialed down ’15 Revenue guidance due to FX.

In a research report published Thursday, RBC Capital analyst Mark Mahaney reiterated a Sector Perform rating on eBay, with a price target of $57, which represents a slight downside potential from current levels.

Mahaney noted, “Current fundamental trends bested expectations, but we have yet to see an inflection point. The Payments segment appears very top-line strong, but the investments required to drive this growth have likely been greater than anticipated. And Marketplace segment growth is clearly deteriorating, and we continue to be concerned that competition is becoming an increasingly difficult challenge. Until material uncertainty is removed re: the latter, we continue to find it hard to recommend the shares at this valuation.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Mahaney has a total average return of 23.6% and a 67.5% success rate. Mahaney has a -4.8% average return when recommending EBAY, and is ranked #14 out of 3577 analysts.

Canaccord Genuity analyst Michael Graham also weighted in today with a few insights on EBAY’s earnings. The analyst reiterated a Hold rating on the stock with a price target of $52. With eBay shares last trading at $58.63, Graham’s price target implies a potential downside of about 12% from current levels.

Graham stated, “eBay’s Q1 results were slightly better than expected on more stable performance from Marketplaces as the traffic impact from 2014 Google algorithm changes waned. PayPal results were also consistent. While FX headwinds impact Q2 guidance, we find 2015 guidance reasonable. We continue to expect the stock to remain range-bound until closer to or after the time of the PayPal separation, expected in Q3.”

Additionally, Piper Jaffray analyst Gene Munster came out today with a bearish call on EBAY, maintaining an Underweight rating on the stock with a price target of $50.

Munster wrote, “eBay reported Mar-15 results largely in-line with our expectations and raised full year EPS guidance slightly, net of FX. Revenue of $4.45b was in-line with consensus and EPS of $0.77 was ahead of consensus at $0.70. Marketplace stabilized as expected and future growth lacks clarity; PayPal continues to have success in non-eBay TPV growth. While the quarter was stable, we note decelerating trends in user count and our long term optimism on shares of EBAY is muted based on our expectations for compression of PayPal’s multiple as investors begin to assess risk beyond 2015.”

Cantor analyst Youssef Squali took the other route, reiterating a Buy rating on the stock, while raising the price target to $68 (from $60). The new price target represents a potential upside of 16% from where the stock is currently trading.

Squali commented: “1Q:15 results were ahead of muted Street expectations, with strong growth in PayPal and a weaker Marketplaces business. Underlying trends show early signs of stabilization in Marketplaces following debilitating blows from last year’s password reset and Google’s SEO changes. We maintain our BUY based on 1) PayPal’s spin-off in 3Q:FY15, per mgt, 2) potential for strategic opportunities for Paypal and/or Marketplaces, 3) potential for improvement in Marketplaces, and 4) ~$2B share buyback that’s in place.”

 

  • dick

    There are many reasons for eBay under-performing. They have been under-performing for years. What the street expects from eBay is a far cry from what heavy eBay users expected from eBay. I’ve been buying and selling on eBay since 1997. I’ve spent an enormous amount on time on eBay over the years. I spend most of my time in the collectibles categories. I remember how as sellers we would wait for that once-a-year free listing day that came after Christmas. Then one year it didn’t come and we were all so bummed. Then John Donahoe came on the scene and we went from no annual free listing day to nearly unlimited free listings. This has all but ruined eBay auctions. The sellers love it, but they don’t understand that it has driven away most of the buyers who have more money than they have free time. It has also hurt eBay’s bottom line because a lot of us are obsessive collectors, and we don’t list items for sale until our searches are finished. Having thousands of re-lists to wade through each week means that most of us never get around to selling on eBay because we can’t get our searching done.

    The same overpriced or uninteresting items get re-listed over and over and over. For hardcore collectors of unique or rare items it has become a nightmare. Constantly seeing the same unsalable items in our searches is driving us crazy. And it is killing auctions. One of my favorite categories is daguerreotypes.

    http://www.ebay.com/sch/Daguerreotypes-/408/i.html

    It’s shocking how many of the auctions in this category have been re-listed 5 or 10 or 50 times. It’s taken all of the fun out of searching eBay. This never happened when sellers had to pay for listings.

    If eBay wants to save its vintage collectibles and antiques markets, it needs to immediately address this problem. We need to be able to filter out re-listed items from our searches. The re-lists will still be seen by the vast majority of eBay buyers as most buyers aren’t the serious “power searchers” like I am. The buyers who have been very active on eBay for a very long time will be the ones who will use the filter.

    EBay should allow us to set a site preference to filter out auctions that have been re-listed once, or twice, or three times. Forcing a buyer to see the same auction item show up in search results over one hundred times is only hurting eBay.

    Don’t get me wrong, I am not against free listings, I am against not having a way to filter out auctions that have been re-listed multiple times. That is what has ruined eBay auctions for buyers of vintage collectibles and antiques. Without the good buyers anymore the sellers of quality items have mostly left. This pertains to the collectibles and antiques categories only. When eBay is ruined for buyers it is also ruined for sellers.

    For years I have monitored, every week, about 100 buyers who collect the same items I buy and sell. (Recently eBay took away the ability to view other bidder’s purchases.) They are hardly buying anything these days. They used to have a long list of purchases each week, now they are only buying a few items on eBay each week. Why? They are as passionate as ever about collecting, many of them are very wealthy, but they just can’t deal with the huge proportion of re-lists to wade through, and the lack of quality items.

    Since 1997 I have faithfully run, every week, my very long lists of bookmarked searches. Every week for 17 years I ran these searches! About 8 months ago I gave up and now I only run about 5% of these weekly searches, just the most important ones. I know I am missing a lot of items but I just don’t have the time or the patience to find a needle in a haystack. If I could filter out any auction from my search that has been re-listed more than 2 or 3 times, I could go back to running all of my searches again, and find a lot more things to buy. And maybe have a little time left over to sell. If I haven’t bought an item after seeing it twice, there is zero chance that I’m ever going to buy it, so why do I have to see it again and again and again in my search results?

    I’m buying only a tiny fraction of what I was buying when I was running all of my searches, because I don’t have the time to wade through the tens of thousands of auctions I have already seen countless times. Some sellers are re-listing the same item (unique antique items) every day, to get more exposure. With a way to filter out these multiple re-lists eBay will bring some sanity back to the site, and the good auctions and good buyers will return. Many of my long-time collector/dealer friends say “Oh, I never look at eBay anymore.” I will never understand why John Donahoe believed that the ultra-competitive “new merchandise” market was more attractive than the market that eBay was built on, the used and rare items, a.k.a. everything that was ever made!

    I’ve been amazed that eBay has never reached out to their most active buyers and sellers, their longest members, to find out what we need and what problems and suggestions we have. We occasionally get survey questions from eBay, but they are always about “how do you like the design of the new home page” or “how likely are you to recommend eBay to your friends,” the questions are never about “how can we improve search to be more efficient for you.”

    For years I tried to get eBay to allow searching in multiple categories at the same time. Instead of having to run three separate keyword searches in antiques, collectibles, and art, we should be able to check boxes for those three categories and have one search do all three at the same time, and only in those three categories. Maybe 10 or 12 years ago I stumbled onto a way to do this, so eBay must have been working on it, but it quickly went away.

    Another serious problem with search is that a keyword search searches all of the listing, including the sellers business name, the boilerplate, etc. I asked Meg Whitman if there was a way to restrict search to just the words describing the item, and excluding the boilerplate and spam words that most sellers use to draw attention to the listing. She told me that one engineer told her they could design that into search, and another said no. That was the last I ever heard of that idea. When I keyword search for “Alaska” items I get every seller who says “Shipping is extra to Alaska and Hawaii.” Someone searching for Ohio memorabilia will get “Ohio residents are required to pay Ohio sales tax.” The boilerplate should not be included in the text to be searched.

    When eBay took away the wild-card search, after many of us had spent years creating very sophisticated searches using the wild card, there was a huge outcry from thousands of eBay users. Did eBay listen to its users about why the wild-card was vital to eBay search? No. They weren’t interested.

    But right now the issue of being able to filter out re-listed auctions from search is the critical issue. It’s the problem that is ruining our eBay experience and preventing eBay from seeing the growth that one would expect for a site with so much potential.