Benchmark Cuts Price Target On eBay

Benchmark cut its price target on eBay Inc EBAY Thursday from $64 to $62 and maintained a Buy rating after the company posted Q4 results.

Analyst Daniel L. Kurnos noted that the price target cut reflected “the weak outlook for Marketplaces and a slightly greater standalone margin impact to each business unit due to increased corporate overhead and dis-synergies, but we still believe there is greater intrinsic value to be realized, particularly now that monetization of at least two business units appears to be a more likely outcome.”

“2015 revenue guidance was over $1 billion below consensus at the mid-point, reflecting nearly no growth in Marketplaces, which also served to mute PayPal’s outlook through lowered TPV growth on eBay.

“While the impact of the stronger dollar and weaker macro conditions in Europe were already somewhat factored in, eBay’s failure to recover from previous Google SEO changes and security issues may now result in declining Marketplaces net transaction revenues through 1H15,” according to the analyst note.

Kurnos suspected “that the Enterprise elimination and Icahn’s heavy involvement, along with his commentary regarding ‘standalone opportunities,’ may further fuel investor speculation of a Marketplaces sale or merger, offsetting the poor growth outlook.”

The $62 price target was based on 12x for Marketplaces, 15x for PayPal and 10x for Enterprise which translates into 12.5x 2015 EV/EBITDA.

eBay Inc recently traded at $55.40, up 3.78 percent,