Cantor Fitzgerald Maintains Buy On Ebay Following Paypal Spinoff


In a research note issued today, Cantor Fitzgerald analyst Youssef Squali maintained a Buy rating on Ebay (NASDAQ:EBAY) with a $63 price target, in light of the news that Ebay is spinning off Paypal. 

Squali wrote, “Today’s announcement is in line with our stated belief that changing market dynamics and lackluster performance in core Marketplaces would cause management to split off PayPal sooner rather than later, offering investors a unique opportunity to invest directly in a leading pure-play, rapidly growing online payment provider. While our sum-of-the-parts analysis alone justifies the move, we view the potential for PayPal’s accelerating growth and its strategic importance in online payments/ecommerce ecosystem as key drivers of value longer-term.”

Squali continued, “One of the strongest arguments in favor of a stand- alone PayPal is the potential to accelerate TPV and revenue growth through PayPal’s integration on other marketplaces, including Amazon and Alibaba, which would make it materially more valuable. A 5% penetration for PayPal on Amazon (for illustration purposes only), would add ~$8B to TPV, ~$200-240M to revenue, and $36-62M to EBITDA for PayPal in 2015, by our estimate. Separating PayPal makes it a potential target for larger players like Google, Amazon, Alibaba, and Microsoft (not to mention Visa/Mastercard), all of whom have tried to build online payment platforms with varying degrees of success.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Youssef Squali has a total average return of 32.3% and a 77.9% success rate. Squali has a 14.5% average return when recommending EBAY, and is ranked #2 out of 3326 analysts.

 

 

 

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