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.”


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