A Bull Vs. Bear Take On eBay's Stock

Over the past the year, eBay Inc (NASDAQ: EBAY) shares have remained relatively flat, trading in a range from $34 to $42.

Benzinga · 01/29/2020 20:22

Over the past the year, eBay Inc (NASDAQ: EBAY) shares have remained relatively flat, trading in a range from $34 to $42.

On Tuesday, eBay reported quarterly earnings of 81 cents per share, which beat the analyst consensus estimate of 76 cents. The company reported quarterly sales of $2.82 billion, which beat the analyst consensus estimate of $2.81 billion.

Based on 17 analysts with a 12-month price target, the average price target on eBay’s stock is $39.25, with a high of $49 and a low of $31, according to TipRanks.

The eBay Bear

BofA Securities analyst Justin Post reiterated a Neutral rating and lowered the price target from $42 to $41.

"We are Neutral on eBay as the company appears to be increasingly underperforming the eCommerce industry with no easy fixes. We remain constructive on eBay's advertising opportunity, and see EPS upside potential on cost cutting, but also see potential for further GMV deceleration to weigh on the stock," the analyst wrote in a note.

BofA doesn't see a strong case for growth to rebound to above offline retail levels.

"While the payments and advertising businesses appear to be gaining traction, these opportunities are well known, and we don’t see any initiatives to materially accelerate user or GMV growth, which we think is necessary for stock to see new buyers and multiple expansion," the analyst said.

The eBay Bull

DA Davidson analyst Tom Forte reiterated a Buy rating and $47 target on eBay’s stock.

"We continue to expect eBay to return to positive U.S. GMV growth after lapping the negative impact of new sales taxes regulation, following the Supreme Court's ruling in 2018," Forte wrote in a note.

The firm expects the board will appoint a permanent CEO soon, and by doing so, it will secure an attractive price for its eBay classifieds business. The analyst noted potential catalysts for eBay:

  • Operational efficiency through the company’s strategic review of assets
  • Management’s elevated buyback program
  • The company’s initiation of a dividend in December 2018, which could attract new investors
  • The potential sale of eBay Classifieds