eBay Inc. EBAY reported mixed second-quarter results and issued below-consensus guidance for the third quarter.
The eBay Analysts: KeyBanc Capital Markets analyst Edward Yruma maintained an Overweight rating and $80 price target on eBay shares.
Credit Suisse analyst Stephen Ju maintained an Overweight rating and increased the price target from $80 to $81.
Raymond James analyst Aaron Kessler maintained a Market Perform rating.
The eBay Theses:
Focus On Core Will Drive Medium-term Growth, KeyBanc Says: eBay is driving growth in high-value buyers, specifically ones who purchase at least six days per year and spend over $800, which currently represent 20% of the buyer base and process about 75% of gross merchandise volume, KeyBanc analyst Yruma said.
Revenue grew by 11% in the quarter despite GMV declining 11%, driven by an acceleration in the payments migration and advertising growth, the analyst noted.
Payments, the analyst said, should contribute to the top line as well as lead to expense leverage, particularly across G&A and sales and marketing.
Additionally, ad revenue outpaced volume, driven by Promoted Listings with more than 430 million of them in the quarter, Yruma noted. New initiatives such as cost-per-click advertising should continue to drive growth and enhance long-term profitability, the analyst said.
"We think advertising represents a meaningful MT opportunity," Yruma said.
eBay's product experience continues to get better and will likely drive long-term GMV growth, while refocused efforts to drive growth within the core buyer/seller base will help reaccelerate medium-term GMV growth, the analyst said.
KeyBanc sees both market share growth and consolidation opportunities.
Related Link: How to Buy eBay Stocks
Product Innovation Driving Adoption, Credit Suisse Says: eBay's second-quarter results exceeded Credit Suisse's expectations despite the lapping of COVID-19 pandemic-driven tailwinds, analyst Ju said. The outperformance was driven by continued monetization uplift from payments and PLA, he added.
eBay has introduced several new product initiatives within advertising, driving adoption, the analyst said. The company's initiative to syndicate ads off-platform to drive more buyers to listings could be another avenue of potential GMV growth over the medium term, he said.
The company, the analyst said, continues along its tech-led re-imagination strategy to grow the core, become the platform of choice for sellers and cultivate life-long trusted relationships with buyers.
eBay is focusing on its path to grow the core, Ju said. Core categories, including collectibles, sneakers and watches are growing significantly faster than the overall business, he added.
eBay Shares Are Fairly Valued, Raymond James Says: eBay's guidance was modestly lower than expectations due to an anticipated low- to mid-teens GMV declines, Raymond James analyst Kessler said.
The GMV declines, the analyst said, were due to increased mobility and fewer stimulus benefits.
"While we remain positive on eBay's improved execution, we believe tougher eCommerce comps over the next few quarters will likely limit outperformance," the analyst said.
Given Raymond James's expectation for low- to mid-single-digit long-term revenue growth, the shares are fairly valued, Kessler said.
eBay Price Action: At last check Thursday, eBay shares were up 1.28% at $68.89.
Related Link: Jack Ma's Alibaba Misses On Q2 Revenue Despite Clocking 1.18B Global Annual Active Customers; Raises Stock Buyback To $15B
Photo: Courtesy of eBay.
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