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eBay stock upgraded to buy, price target raised to $55


On Wednesday, CFRA raised its outlook for eBay Inc (NASDAQ:EBAY), elevating the stock from Buy to Buy and increasing the price target to $55 from the previous $45. The upward revision comes after eBay reported fourth-quarter results that surpassed consensus forecasts and provided a robust outlook for 2024, including anticipated positive growth in gross merchandise volume (GMV) in the second half of the year.

The new price target is based on a 9.0x enterprise value/adjusted EBITDA (EV/EBITDA) multiple applied to the firm’s 2024 adjusted EBITDA estimate of $3.29 billion, reflecting a 4% year-over-year increase. This valuation is within eBay’s historical average range of 8x to 12x. CFRA also adjusted its earnings per share (EPS) projections for eBay, raising the 2024 EPS estimate to $4.65 from $4.58 and the 2025 forecast to $4.85 from $4.74.

eBay’s performance in the fourth quarter showed significant strength, with GMV, sales, and EPS all exceeding market expectations. The company’s 2024 outlook suggests that GMV growth will turn positive in the latter half of the year, following a period of flat to negative growth lasting approximately three years. Additionally, eBay anticipates an operating margin expansion, the first since 2020, which CFRA believes could serve as a catalyst for the stock to achieve a higher valuation.

CFRA’s revised opinion to Buy reflects a more optimistic assessment of eBay’s prospects and considers the stock’s valuation attractive at current levels. While acknowledging the competitive risk posed by rapidly growing platforms like Temu and Shein, CFRA notes that eBay’s marketplace maintains a distinct position by focusing on non-new, in-season products across specific categories. Moreover, the majority of eBay’s traffic is organic, which is viewed favorably in light of Temu’s significant online advertising presence.


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