Seeing several different paths to value creation, Credit Suisse research analysts Paul Bieber and Vikram Kesavabhotla have upgraded eBay Inc. EBAY to Outperform and set a $44 price target.
The research report noted that while eBay is still a turnaround story, the company has a very stable marketplace and has the potential for accelerated growth in the second half of 2017, and in 2018.
What Growth Are Analysts Bidding On?
- The potential monetization of Stubhub and/or the Classifieds businesses: The research report estimated these businesses could be worth between $9.5 and $12.8 billion dollars. Specifically, Bieber and Kesavabhotla said, “Given Classified/Stubhub asset value, our analysis suggests the Marketplace is undervalued at ~13x vs. retail comps at 18x. Stubhub and the Classifieds business are two attractive businesses that we think are under-appreciated by the Street.”
- There is potential for an increase in Gross Merchandise Volume (GMV) for eBay: This would be driven by “structured data, new product experiences and investments in marketing,” said Bieber and Kesavabhotla. As eBay re-architects its platform to improve search relevancy and conversion rates, this should lead to an increase in GMC and revenue growth.
- EBay is beginning to eliminate third party products ads on its platform: These were driving users away from the site. This should also improve transaction revenue growth according to Bieber and Kesavabhotla.
- EBay has increased share repurchases over the past year:This could add an incremental $0.10 to 2018 and 2019 EPS, Bieber and Kesavabhotla noted. Once eBay reaches the two-year anniversary of the PayPal Holdings Inc PYPL spin-off, eBay will no longer be restricted by the number of shares it can repurchase.
Related Links:
Analyst: Etsy Could Make Sense For eBay, But Sale Over Near Term Is Unlikely
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Posted In: Analyst ColorLong IdeasUpgradesPrice TargetTop StoriesAnalyst RatingsTrading IdeasCredit SuissePaul BieberVikram Kesavabhotla
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