UPDATE: Citigroup Initiates eBay at Buy on Attractive Valuation

In a report published Wednesday, Citigroup analyst Mark May initiated coverage on eBay EBAY with a Buy rating and $65.00 price target.

In the report, Citigroup noted, “We are initiating coverage of EBAY with a Buy rating and view it as a core holding in the Internet sector. As online and offline retail converge and as mobile becomes a key driver of both disruption and innovation, we believe EBAY is uniquely positioned. Management execution has been strong, and considering trailing and forecasted growth (15-20%) and the business model's profitability (33%+ EBITDA and 20%+ FCF margin), we view the current valuation as attractive (10x EV/CY14 EBITDA, 17x adj. P/E, 6% FCF yield). Our analysis suggests investors are getting the established businesses at an attractive valuation and receiving the PayPal Offline optionality for free. Our $65 price target implies 21% upside from current levels, implies a target forward EV/EBITDA multiple of 12x, and is based on an assumed 3-year CAGR for revenue and adj. EBITDA of 17% and 19%, respectively. Recent Marketplace enhancements and the pending PayPal Offline consumer push could act as catalysts in 2H13 and beyond.”

eBay closed on Tuesday at $54.49.