On Tuesday, JPMorgan reinstated coverage on eBay Inc (NASDAQ:), shifting its stance to a Neutral rating with an increased price target of $60, up from the previous target of $48. eBay’s stock has seen a significant uptick, rising approximately 24% year-to-date, outperforming the S&P 500’s 14% gain.
The online marketplace has demonstrated steady growth, with Gross Merchandise Volume (GMV) reaching a nearly flat year-over-year rate in recent quarters and is projected to see a slight uptick in the fourth quarter of 2024.
The company’s Focus Categories (FCs), which have been growing at a rate of 4-5% over the past four quarters, are anticipated to represent about half of eBay’s overall GMV in the medium term, a substantial increase from 30% in the fourth quarter of 2023. eBay has been investing heavily in product innovations such as GenAI, which has enhanced product listings for sellers and shopping features for buyers, including ‘Shop the Look’ and ‘Explore.’
eBay’s Non-GAAP Operating Income (OI) margins are expected to expand, with projections indicating an increase of 90 basis points to 28.3% in 2024. This anticipated growth is attributed to the company’s efforts to optimize payment efficiencies and internal costs. Furthermore, following the completion of the Adevinta transaction, eBay might boost its share repurchase program, with an estimated $2.5 billion in buybacks for 2024.
The company’s Non-GAAP earnings per share (EPS) are forecasted to grow in the low to mid-teens over the next few years, while revenue growth is expected to remain modest in the low to mid-single digits.
eBay’s valuation and the new price target are based on approximately 15 times the projected 2025 GAAP EPS of $3.97 and around 11 times the projected 2025 Non-GAAP EPS of $5.39. Despite positive growth indicators, eBay’s performance remains susceptible to broader macroeconomic pressures.
In other recent news, eBay has been the focus of several notable developments. The company has successfully completed the sale of a substantial stake in Adevinta ASA for approximately $2.4 billion, with the proceeds expected to be directed towards general corporate activities including share repurchases, debt repayment, and capital investments.
Also, eBay’s stock has been upgraded by Citi to a Buy rating due to anticipated margin expansion and share buybacks, with a price target of $64.00 set for the company.
In addition, Baird raised its price target for eBay shares to $58, maintaining an…
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