Morgan Stanley On eBay: 'Spin Is In, But Now What?'

In a report published Monday, Morgan Stanley analysts maintained their Equal Weight rating on

and price target of $52. Although the company is expected to post lackluster Q1 results, stock valuation is likely to be supported by the anticipated PayPal spin. According to the analysts, "In the past eBay has worked to improve its Marketplaces business to grow in-line with overall e-commerce, but in 1Q we see its N. American business again growing slower than total retail sales and lagging e-commerce growth by 1,100bp." The analysts expect the Marketplaces segment to continue to struggle, with eBay's business "slowing" and losing market share, according to sellers. Some of the headwinds the company is facing include cyberattacks and password reset, Google Panda changes, Fx volatility leading to weaker cross-border sales and market share losses to

due to mobile transition. "Decelerating TPV growth plus continued take-rate pressure (from the rapidly-growing but lower margin Braintree) leads to slowing revenue growth, as we see total PayPal constant currency revenue growth decelerating to 19% from 21% in 4Q," Morgan Stanley said. While the analysts expect eBay to report Q1 results largely in line with the consensus, updates on the imminent PayPal spin, which is due in 2H15, as well as news regarding the stand-alone growth or business strategies for Marketplaces or PayPal following the spin are awaited. Updates regarding the company's attempts to sell eBay Enterprise are also awaited.