Analysts Stay On Ebay Sidelines After Q1 Earnings: Here's Why

Zinger Key Points
  • Ongoing headwinds against the company was a continued theme in the earnings report and among the biggest takeaways from one analyst.
  • An analyst called shares fairly valued based on trading at seven times 2022 estimates enterprise value divided by EBITDA.

Auction and marketplace company eBay Inc EBAY reported first-quarter earnings after market close Wednesday. Analysts reacted to the earnings and what shares trading at new lows means.

The eBay Analysts: Credit Suisse analyst Stephen Ju had an Outperform rating on eBay and lowered the price target from $66 to $62.

Raymond James analyst Aaron Kessler had a Market Perform rating on eBay and no price target.

Related Link: Ebay Stock Drops After Q1 Results Beats Estimates, Outlook Below Consensus 

The Analyst Takeaways: Ongoing headwinds against the company was a continued theme in the earnings report and among the biggest takeaways from Ju.

“The lowered outlook is primarily due to ongoing macroeconomic headwinds around inflation as well as the geopolitical uncertainty in Eastern Europe,” Ju said.

The analyst noted that sales in Russia and Ukraine amount to less than 1% of the company’s revenue, but concerns over repeat transactions in several European countries remain.

Ju highlighted the company is continuing to progress on expansion items it laid out in its latest Analyst Day, which could help over the long term.

“The primary beneficiaries of all of these strategic priorities on the demand side are the ‘enthusiast buyers’ who represent 70%+ of GMV.”

Kessler pointed to macro pressures facing eBay as well.

“We remain positive on eBay’s improved execution. We expect shares to remain range-bound near-term given the slower GMV growth outlook and uncertain macro backdrop,” Kessler said.

The analyst called shares fairly valued based on trading at seven times 2022 estimates enterprise value divided by EBITDA.

Kessler noted eBay saw active buyers decline in the quarter, which was the fifth straight quarter of declines for the company.

Price Action: eBay shares were down 11.72% to $48.07 on Thursday at market close, closer to its 52-week low of $47.29 than its high of $81.19.

 

Posted In: Aaron Kesslerauction stocksCredit Suisseecommerce stocksRaymond JamesStephen JuAnalyst ColorEarningsNewsPrice TargetReiterationAnalyst RatingsTrading Ideas