4 Key Points From BMO's eBay Upgrade

E-commerce company eBay Inc EBAY stands to benefit in 2018 from multiple positive factors, according to a Sunday note from BMO Capital Markets.

The Analyst

BMO Capital Markets analyst Daniel Salmon upgraded his rating on the shares of the company from Market Perform to Outperform and lifted his price target for the shares from $40 to $45.

The Thesis

eBay's promoted listings are trending above expectations due to quicker-than-expected rollout to new markets, Salmon said in the note. (See Salmon's track record here.) 

Promoted listings will generate revenues of $83 million in 2017, $200 million in 2018 and $340 million in 2019, up from Salmon's previous estimates of $81 million, $175 million and $300 million, respectively, he said. 

BMO Capital Markets expects the company's Marketplace gross merchandise value growth to be supported by its new marketing campaign and several ongoing initiatives such as eBay Guaranteed Group listings and investments in structured data/machine learning.

A new service the company has launched for the domestic Chinese market will offer upside to its GMV estimates, Salmon said. BMO expects enhancements to the site in the year ahead.

BMO raised its estimates for eBay and, citing the revised estimates, a higher multiple and improving revenue growth, raised its price target for the shares.

The Price Action

eBay shares are up over 20 percent year-to-date.

At the time of writing, the stock was up 1.45 percent at $35.71.

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