How Can eBay Boost Shareholders? UBS Has An Idea
In a report published Thursday, UBS analyst Eric Sheridan maintained a Buy rating on eBay Inc (NASDAQ: EBAY), while raising the price target from $64 to $70. The analyst believes that there is significant potential for eBay to raise shareholder returns.
"We continue to believe that the potential for value creating capital allocation announcements could reside within the eBay (ex-PayPal) business," Sheridan stated. The analyst believes that the company could return more than 25 percent of its implied market cap to its shareholders in future on the basis of a combination of asset monetization and increased leverage.
"In our view, the potential for these types of transactions underscores both the value that resides within EBAY shares & potential for growth (organic fixes, cost cuts reinvested for growth, reduced share count, albeit with interest expense offsets from any increased debt)," the UBS report says.
Additional shareholder value could be created via the company's investment in the Indian e-commerce company, Snapdeal, along with the incremental deployment of future free cash flow and potential tax savings due to the capital losses associated with the sale of eBay Enterprise.
"While eBay may not execute all of the above, we do expect to gain additional clarity on capital allocation as we approach separation," Sheridan explained, adding, "This potential for significant shareholder returns, combined with the catalyst of the approaching separation event, along with easing 2H 2015 compares and a reasonable valuation creates an attractive backdrop for EBAY shares in our view."
Latest Ratings for EBAY
|Oct 2016||Hilliard Lyons||Upgrades||Long-Term Buy||Buy|
|Sep 2016||Deutsche Bank||Upgrades||Hold||Buy|
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