Several Reasons eBay Just Won An Outperform Rating From Credit Suisse

Seeing several different paths to value creation, Credit Suisse research analysts Paul Bieber and Vikram Kesavabhotla have upgraded eBay Inc. (NASDAQ: EBAY) to Outperform and set a $44 price target.

The research report noted that while eBay is still a turnaround story, the company has a very stable marketplace and has the potential for accelerated growth in the second half of 2017, and in 2018.

What Growth Are Analysts Bidding On?

1. The potential monetization of Stubhub and/or the Classifieds businesses: The research report estimated these businesses could be worth between $9.5 and $12.8 billion dollars. Specifically, Bieber and Kesavabhotla said, “Given Classified/Stubhub asset value, our analysis suggests the Marketplace is undervalued at ~13x vs. retail comps at 18x. Stubhub and the Classifieds business are two attractive businesses that we think are under-appreciated by the Street.”
2. There is potential for an increase in Gross Merchandise Volume (GMV) for eBay: This would be driven by “structured data, new product experiences and investments in marketing,” said Bieber and Kesavabhotla. As eBay re-architects its platform to improve search relevancy and conversion rates, this should lead to an increase in GMC and revenue growth.
3. EBay is beginning to eliminate third party products ads on its platform: These were driving users away from the site. This should also improve transaction revenue growth according to Bieber and Kesavabhotla.
4. EBay has increased share repurchases over the past year:This could add an incremental $0.10 to 2018 and 2019 EPS, Bieber and Kesavabhotla noted. Once eBay reaches the two-year anniversary of the PayPal Holdings Inc (NASDAQ: PYPL) spin-off, eBay will no longer be restricted by the number of shares it can repurchase.

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