Technology

Are Analysts and Investors Getting Too Down on eBay?

Chris Lange

Published: January 30, 2016 10:35 am

Last Updated: January 13, 2020 1:53 pm

eBay Inc. (NASDAQ: EBAY) recently posted its fourth-quarter financial results, which were in line with estimates, but guidance severely undercut this success. As a result analysts piled on to the stock, but they may have been overly negative, considering the earnings report.

The e-commerce giant posted adjusted diluted earnings per share (EPS) of $0.50 on revenues of $2.3 billion. In the same period a year ago, eBay reported $0.55 EPS on revenues of $4.92 billion. The Thomson Reuters estimates called for EPS of $0.50 and $2.32 billion in revenue.

Gross merchandise value rose 5% in the quarter to $21.9 billion, excluding currency exchange effects.

The company also generated $1.1 billion of operating cash flow from continuing operations and $1.0 billion of free cash flow from continuing operations, and it repurchased $550 million of its common stock and completed the divestiture of its Enterprise business on November 2, 2015.

The company’s first-quarter outlook calls for revenues of $2.05 billion to $2.1 billion and adjusted EPS of $0.43 to $0.45. The EPS outlook is considerably short of the consensus estimate of $0.48 billion. The consensus revenue forecast calls for $2.16 billion, well ahead of the top of eBay’s expected range.

• R.W. Baird has an Outperform rating but lowered its price target to $30 from $33.
• Benchmark has a Buy rating and only slightly lowered its price target to $28 from $29.
• Bernstein lowered its price target to $32 from $34.
• Canaccord Genuity has a Hold rating and lowered its price target to $26 from $28.
• Cowen has a Market Perform rating and lowered its price target to $25 from $27.
• Credit Suisse lowered its price target to $29 from $30.
• Deutsche Bank has a Hold rating and lowered its price target to $28 from $33.
• Evercore ISI has a Hold rating and lowered its price target to $26 from $29.
• Goldman Sachs has a Buy rating and lowered its price target slightly to $32 from $33.
• Jefferies has a Hold rating and lowered its price target to $25 from $28.
• JPMorgan lowered its price target to $28 from $30.
• Macquarie has a Neutral rating and lowered its price target to $26 from $29.
• RBC Capital Markets has a Sector Perform rating and lowered its price target to $29 from $30.
• SunTrust Robinson Humphreys has a Neutral rating and lowered its price target to $26 from $28.
• Susquehanna has a Positive rating and lowered its price target to $32 from $34.
• UBS has a Buy rating and lowered its price target to $32 from $34.

Shares of eBay ended the week at $23.46, with a consensus analyst price target listed as $28.56 (but this may change) and a 52-week trading range of $22.11 to $29.83.