Stifel Upgrades eBay To Buy, Sees Favorable Risk To Reward Ratio

Scott Devitt of Stifel upgraded shares of

to Buy from Hold on Monday while establishing a $65 price target. “We envision a $2:$1 risk/reward on a base case and $3:$1 on a bull case based on what we believe are a reasonable set of assumptions and comparable,” Devitt wrote in a note. The assumptions Devitt refers to include a corporate spin off within nine months in which PayPal will gain share of ecommerce. The analyst adds that a spin could create a “trough margin profile” that allows both eBay and PayPal to invest while operating profits grow faster than revenue. Devitt also believes that eBay's Marketplaces gross margin will see acceleration in the second half of 2015. Bottom line, the next 12 to 18 months will be “jolly” for eBay investors with “limited downside risk” and the possibility of a $75 per share bull case outcome.