Are Analysts and Investors Getting Too Down on eBay?

By Chris Lange Updated Jan 13, 1:53PM EST · Published Jan 30, 10:35AM EST

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Are Analysts and Investors Getting Too Down on eBay? — © Thinkstock

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.
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Analysts had this to say about eBay:

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.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.