Bob Peck Weighs In On PayPal's Beat, eBay's Loss

• eBay Inc EBAY and Paypal Holdings Inc PYPL reported their fourth quarter fiscal 2015 financial results after the market closed on Thursday.
• While eBay’s results came in pretty much in-line with expectations, PayPal’s surprised analysts and investors alike.
• Following the earnings calls, SunTrust’s Bob Peck weighed in on the companies. So, let’s take a look into what he said.

In two separate reports issued Thursday, SunTrust’s Bob Peck issued a Buy rating and $38.00 price target on shares of PayPal, and a Neutral rating and $26.00 price target (down from a previous $28.00) on shares of eBay. Below are his comments.

PayPal

As many analysts expected, PayPal delivered strong fourth quarter results and issued 2016 guidance in-line with forecasts. The company also announced a $2 billion buyback program.

SunTrust does not envision forward numbers moving much, on account of inline guidance. However, “confidence in the revision trend should increase given the 4Q beat (revenue and TPV growth accelerated), solid 1Q guide, and buyback.”

The firm’s 2016 revenue and EPS estimates of $10.6 billion and $1.49, respectively, remain generally unchanged, same as its Buy rating (based on “lots of modest positives”) and price target.

eBay

eBay’s results were largely in line with Street estimates. However, 2016 guidance came in below the already modest growth forecasts, mainly driven by FX headwinds.

“The critical structured data initiative, on which the ongoing transformation hinges, is ~40% complete, and expected at 60% by mid-year,” Peck explained. The company plans to repurchase more than $2 billion of shares over the year, he pointed out as well. “Its buyback is limited by tax code through mid-2016, but post-that, we believe the company likely will lever up to aggressively return capital to shareholders,” he added.

The firm maintained its Neutral rating after the earnings call, but decided to trim its price target by $2.00 to $26.00, to better account for the updated guidance and re-rated market.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.