eBay's Price Target Raised by Credit Suisse, Rating Upgraded

Zacks Equity Research
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eBay Inc.’s EBAY price target was recently raised by more than 29% to $44 from $34 by investment firm, Credit Suisse. Additionally, analysts upgraded the stock’s rating to Outperform from Neutral.

Following the upgrade, eBay’s shares were up 0.65% to $35.55. Also, in the last one year, the stock has outperformed the Zacks Internet - Commerce industry. The stock gained 48.2% compared with the industry’s growth of 46.2%.

Why the Upgrade?

Credit Suisse’s analyst Paul Bieber remains encouraged by the company’s growth in its marketplace business. He believes that the platform changes, product innovation and investment in marketing will help in driving growth in the marketplace business through the second half of 2017.

In order to further expand its growth, Marketplace rolled out a number of new consumer experiences built on eBay’s structured data efforts. In the recently reported first quarter, the company also rolled out a new personalized homepage in the Netherlands and announced new services like Guaranteed Delivery program on 20 million items that arrive in three days or less. An authentication program to enhance consumer confidence related to high-end merchandise purchase was also introduced.

Additionally, Bieber is also positive about eBay’s classified and StubHub businesses. The analyst expects the combined value of these businesses to be worth $9.5–$12.8 billion or 25–35% of current enterprise value.

Recently, StubHub became the official ticket resale marketplace for Los Angeles Angels and Toronto Blue Jays. Classifieds launched a personalized homepage feed on Marktplaats.nl and continued integrating inventory with the Marketplace platform across multiple regions.

Moreover, the analyst is positive about the company’s share repurchase program. Bieber expects the share repurchases to add 10 cents to the company’s earnings in 2018. The company has repurchased roughly $350 million shares in the first quarter.

Bottom line

eBay is one of the world's largest online trading communities with a powerful marketplace for sale of goods and services by individuals and small businesses. The company enables trade on a local, national and international basis with local sites in numerous markets of the U.S. the U.K., Canada, Germany, Austria, France, Italy, Japan, Korea and Australia.

eBay continues to increase user engagement and satisfaction by driving traffic to its top-rated sellers. Although its growth rate has come down after PayPal’s spinoff, standalone eBay offers a convincing opportunity with a desirable marketplace format. It has no inventory risk, better margins, and greater capital efficiency than most retailers.

Numerous initiatives including structured data, application of artificial intelligence, enhancing mobile experience, increased use of social media to drive traffic, focus on a discovery-based user experience, category merchandising, and an easier listing process are tailwinds.

However, intensifying competition in the e-Commerce space as well as foreign exchange headwinds remain major concerns for the stock.

eBay Inc. Price and Consensus

 

eBay Inc. Price and Consensus | eBay Inc. Quote

Zacks Rank & Stocks to Consider

Currently, eBay has a Zacks Rank #3 (Hold). Some stocks that have been performing well in the same space are Autobytel Inc. ABTL, Mercadolibre, Inc. MELI and PetMed Express, Inc. PETS, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Autobytel Inc. delivered a positive earnings surprise of 41.98%, on average, in the trailing four quarters.

Mercadolibre, Inc. delivered a positive earnings surprise of 26.74%, on average, in the trailing four quarters.

PetMed Express, Inc. delivered a positive earnings surprise of 9.32%, on average, in the trailing four quarters.

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