Benchmark's Dan Kurnos Previews eBay's Q4 Earnings

eBay Inc EBAY is scheduled to report its Q4 2016 results on January 25. Although the company is likely to have gained market share, any upside surprise may be offset on a reported basis by an expected currency headwind, Benchmark's Dan Kurnos said in a report. He maintains a Buy rating on eBay, while reducing the price target to $37.

EBay’s shares of have recovered ~10 percent since the start of the election rally, mostly in line with the broader marketplace. Kurnos added, however, that the timing of the recovery indicates “little benefit from the clear ecommerce outperformance in light of the underwhelming brick-and-mortar results to date.”

Q4 Preview

The holiday period was overly price sensitive, which may have resulted in eBay gaining market share, as did competitor Amazon.com, Inc. AMZN (Rated: Buy), which was the primary beneficiary. Any benefit from this may be offset by an estimated 1-2 percent headwind from the pound, which Kurnos believes could “continue to weigh on eBay’s ability to generate operating leverage.”

The analyst forecast only 2.5 percent gross merchandise volume growth for Q4, including merely 10 percent year-over-year growth at StubHub due to tough comps. He expects growth to accelerate to a mid-single digit range in 2017, despite any currency headwinds.

For full-year 2016, Kurnos projected a 3 percent decline in EBITDA, “reflecting increased reinvestment in product development and platform expansion,” with EPS at $1.88 due to share repurchases in each quarter of the year.

At last check, shares of eBay were down 1.3 percent at $29.88.