eBay Earnings Preview: Looking For An In-Line Report (EBAY)
eBay (NASDAQ: EBAY) is expected to report second quarter EPS Wednesday after the close.
Analysts are expected the company to report EPS of $0.64, better than the $0.56 reported in the same period a year ago, while revenue is expected to rise to $3.89 billion from $3.4 billion a year ago.
Goldman Sachs reiterated a buy on the stock on last Thursday heading into earnings as they are bullish on accelerating marketplaces growth. "Contrary to management's guidance for slowing growth in 2Q, ChannelAdvisor reported 18.1% growth in SSS in 2Q, up from 15.4% in 1Q. Similarly, comScore reported reaccelerating visitor growth in 2Q to 4% versus c. 1% in 1Q, while mobile grew 138% yoy in 2Q. Our current forecast is for segment revenue of $2.03bn, up 11.8% yoy, vs. 1Q's 13.3%."
Goldman sees revenue at $3.9 billion, slightly better than consensus in the quarter, while they see EPS of $0.63, $0.01 below the average forecast. However, they are bullish on the stock and reiterate a buy rating and $63 price target. "We continue to believe that, at c.17x what we believe are our relatively conservative 2014 adjusted EPS estimates, eBay represents the most compelling risk/reward in our coverage."
Second Half Key
Deutsche Bank is more cautious heading into earnings here, as they note that growth should accelerate into the second half of the year. "We expect eBay to report in-line results for the Marketplaces segment with US ex-Vehicle growth largely stable (+14%-15%) vs. 1Q on ASP growth partially offset by unit deceleration. On the PayPal side, we expect Merchant Services growth of 27% Y/Y but expect take-rates to decline Y/Y from tougher hedging comps."
"Our $60 PT is based on a blended average of 20x PE, 12x EV/EBITDA and a 4.5% target free cash flow yield on our 2014 estimates. Risks to our price target include merchant services deceleration and take rate compression. Upside risk: if PayPal's off eBay initiatives materialize faster than expected." They have a hold rating.
Expect Outlook to Be Maintained
Cantor Fitzgerald sees eBay reaffirming its full year outlook tomorrow as they reiterate buy on the stock ahead of earnings. They have a $64.00 price target.
"We expect the 3Q outlook to be in-line with current consensus for $3.97B/$0.65 in revenue/EPS. Management is likely to reiterate its guidance for FY:13, which implies some acceleration in 2H:13. Current guidance is $16.0-16.5B/$2.70-2.75 in revenue/ EPS vs. consensus' $16.31B/$2.75."
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