eBay Has 'Intrinsic Value' Ahead Of PayPal Spinoff, Benchmark Explains

In a report published Friday, Benchmark analyst Daniel L. Kurnos maintained a Buy rating on eBay Inc (NASDAQ: EBAY), with a price target of $71.eBay's shares appreciated after the company reported stronger-than-expected 2Q15 results for both Marketplaces and Paypal Holdings Inc (NASDAQ: PYPLV) and ahead of the AMC spin. Analyst Daniel L Kurnos pointed out, "…the results and subsequent price action in the when-issued market validates our call that Marketplaces remains an undervalued asset that is likely to be sold post-spin, with investors piling into standalone PayPal."In the report Benchmark noted, "…the outlook for both PayPal and standalone Marketplaces appeared improved as well, with PayPal offering several internal metrics, including Venmo growth, which could help drive future net dollar growth and leverage despite the widely-known pressure on the take rate."The company is likely to surpass the Benchmark estimate of 14 percent net Payments revenue and EBITDA margin expansion of 20bps in 2016.Persistent headwinds from the previous SEO, SEM and cyber security issues on customer retention and loyalty are expected to continue having a negative impact ton Marketplaces' performance. "We still believe Marketplaces may need to spend more than the street is forecasting to aggressively combat those challenges but were encouraged by signs of stabilization in user account growth. We believe management's 3-5% FX-neutral growth guidance is a very low bar," the Benchmark report added.Expressing surprise at the very low sale price of $925 million for eBay Enterprise, Kurnos mentioned that the spinoff will enable eBay to move forward with a clean currency and use the same for share repurchases.