EBay Investors Shouldn't Be Too Dismayed By 2017 Guidance

eBay Inc EBAY reported broadly in-line Q4 results and announced full-year guidance marginally ahead of expectations.

eBay’s turnaround seems “firmly underway,” given the company’s increased investment and accelerating guidance, Benchmark's Daniel Kurnos said in a report.

Kurnos maintained a Buy rating on the company, while raising the price target from $37 to $39.

Good Results

eBay reported its Q4 EBITDA ahead of the consensus by $6 million.

“A solid holiday quarter helped drive the record results in the Marketplace segment and mobile acceleration was an unexpected tailwind that bodes well for the next few quarters,” Kurnos mentioned.

Good Guidance

The 2017 guidance implied “modest sustained performance” in the first half of the year and a “significant ramp” in the second half, the analyst stated. The mid-point of the 2017 revenue guidance came in higher than the consensus by $40 million.

Given that eBay has historically announced conservative guidance and that this year the company has a more aggressive investment plan, “we believe the turnaround is underway, with results likely benefiting from operational leverage as the structured data initiative continues to move forward at an accelerated pace,” Kurnos commented. He reduced the EPS estimates for 2017 and 2018 by $0.07 to $2.01 and by $0.10 to $2.30, respectively.