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SunTrust has lowered their price target for shares of eBay
EBAY from $65 to $62 after the company
reported first quarter earnings, weaker-than-expected second quarter guidance, and announced it a $3 billion tax charge to facilitate repatriation of $6 billion net in foreign earnings.
Robert Peck of SunTrust believes the reason for the the repatriation may be:
- To fund/expand US operations (PayPal). Peck estimated ~80% of FCF is generated overseas.
- To complete the remaining $3.8 billion remaining in the buyback program.
- To maintain flexibility for acquisitions.
- To pay off the company's debt, which is $4.1 billion outstanding.
The analyst is encouraged by “rock solid” payment figures as total payment volume grew for the fourth consecutive quarter to 26 percent.
The $62 target is based on “2015 EV/EBITDA of 11x, which is eBay's average FY1 multiple for the past for years, and a one multiple premium to Ebay's comp groups given higher top-line growth,” said Peck.
Shares of eBay are set to open lower by 5 percent from Tuesday's closing price of $54.54.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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