Axiom Upgrades eBay To 'Buy' Ahead Of PayPal Spinoff

In a report published Tuesday, Axiom Capital Research analysts upgraded the rating for

from Hold to Buy, while maintaining the price target at $70, ahead of the PayPal spinoff. "The shares have been stuck within a range of ~$55-$60 this year on below-industry growth rate challenges at eBay and competitive concerns at PayPal. While these concerns persist, we see stabilization at eBay continuing against easier comps in 2H15, and we are now optimistic that PayPal can weather the bevy of global competitive threats." The analysts expect eBay to continue to shrink the share count into the separation. Following the spin, both companies are likely to be capitalized enough to take advantage of growth opportunities. Value at eBay could be further unlocked with more spinoffs or asset sales and it could become an acquisition target in a few years. "eBay is considering a sale or an IPO of the eBay Enterprise business, which we conservatively value in excess of $1B. In addition, eBay has a collection of classifieds websites that we estimate together generate near $1B in annual revenues," the analysts wrote. Following the spinoff, an aggressive share buyback plan and a quarterly dividend may make the shares more appealing to "a wider swath of investors," the report added.