EBay Shares Could Be Due For A Pullback, But Look Bullish

EBay Inc EBAY shares have been on a torrid rip higher over the last month, rallying over 8 percent off the February 2 low.

Can the auction website ramp up enough sales to continue to recent bullish action? How much sales growth is necessary to keep the valuations out of the clouds? Let's take a look at eBay from multiple angles.

What The Bulls See

• Some reasonable valuation metrics: The bulls see eBay's P/E of 17 as cheap versus the S&P's 22 multiple and a price-to-sales ratio of 3.96.
• EBay is a money maker: Gross profit margins of 19.83 percent and a positive levered free cash flow of $4.91 billion annually.
• A clean balance sheet: Cash of over $10 billion versus debt of around $7 billion, a debt-to-equity ratio of 38.32 percent and a current ratio of 1.51.

What The Bears See

• Some pricey valuation metrics: The market cap is $70.6 billion versus the estimated enterprise value of $67.6 billion, the bears see eBay's P/E of 17 as expensive versus the expected revenue growth of 10.5 percent and earnings growth of 10.8 percent and the price-to-book ratio of 3.6.
• Flat net profit margins.

The Technical Take

Technicians note that eBay shares could be in the midst of the next long-term bull leg. If they are accurate, the current rally will take out the 2014 high of $59.70 (eBay traded at $57.91 at time of writing) and move up to the projected upside target range of $65.24 to $67.41.

Overall

EBay looks like it could be a nice play for the bulls once it pulls back a bit, purely based on the technicals. EBay is a market stock right now, meaning that if the market is rallying or pulling back, EBay is likely going to be doing the same.