Benchmark Maintains on eBay as PayPal Opportunity is Seen
In a report published Wednesday , Benchmark analyst Daniel Kurnos maintained a Buy rating on eBay (NASDAQ: EBAY), with a $63.00 price target, as expectations decline and PayPal is still a tremendous opportunity.
According to the report, both the media and the sell-side have become increasingly bearish on EBAY following what was perceived as a disappointing year for PayPal vs. expectations and given several industry reports pointing to a weaker-than-expected holiday period.
“We note that eBay had warned of slowing ecommerce growth post 3Q results, and that the Company faces its most difficult Marketplaces comparison of the year, with net transaction revenues growing by 16% y/y in 4Q12,” the report noted. “While we admit there could be some modest downside to our 4Q estimate, which may already be reflected in consensus, with shares trading at only 10x our 2014E EV/EBITDA and potential upside to PayPal from offline initiatives and synergies with the recent Braintree acquisition, we still believe eBay has positive longer-term momentum.”
Some highlights from the report included:
-”We believe that increasing competition, including more simplistic and mobile-centric solutions, has caused investors to second-guess PayPal's longer-term growth rate, which we think should be sustainable in the low-mid 20% range.” -”eBay trades at 17x 2014E adjusted EPS and 10x 2014E EBITDA, at a slight discount to ecommerce comparables at 19x and 11x, respectively, and above the S&P 500 index at 15x.”
EBAY closed Tuesday at $53.96.
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