eBay’s Stock Performance: Strong Gains Met with Cautious Outlook

With a market cap of $32.2 billion, eBay Inc. (EBAY) stands out as a global online marketplace where users buy and sell products, either through auctions or direct sales. The company started as a small auction site but has evolved into a major e-commerce platform catering to millions of users worldwide.

Remarkable Performance Amid Market Trends

In the last 52 weeks, shares of eBay have notably outperformed the broader market. EBAY has soared 60.2% during this period, compared to the S&P 500 Index ($SPX), which has rallied 20.9%. Year-to-date, eBay shares have increased by 8.4%, while the S&P 500 has gained 1.9%.

Comparative Insights with Industry Benchmarks

The San Jose, California-based company has also outshone the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 29.7% return in the same time frame, as well as its year-to-date gain of 2.5%.

Disappointing Holiday Guidance Impacts Stock

On October 30, eBay reported a better-than-expected Q3, posting an adjusted EPS of $1.19 per share alongside revenue of $2.6 billion. However, shares fell by 8.2% the next day due to disappointing guidance for the holiday season. The company estimates Q4 revenue to be between $2.5 billion and $2.6 billion, with adjusted EPS projected between $1.17 and $1.22, below analyst expectations. Concerns from analysts at Jefferies and Deutsche Bank regarding the GMV outlook, estimated at $18.9 billion to $19.3 billion, added to investor uncertainty, citing potential weaknesses in eBay’s growth trajectory.

Looking Ahead: Analyst Projections for Fiscal 2024

For fiscal 2024, analysts anticipate that eBay’s EPS will grow by 22.9% year-over-year to reach $3.86. Historically, the company’s earnings surprises have been inconsistent, meeting or exceeding consensus estimates in half of the last four quarters.

Analyst Ratings and Future Targets

Among the 29 analysts covering the stock, the consensus rating stands at “Moderate Buy.” This comprises nine “Strong Buy” ratings, one “Moderate Buy,” 17 “Holds,” one “Moderate Sell,” and one “Strong Sell.”

Wells Fargo Adjusts Price Target

On February 3, Wells Fargo raised eBay’s price target to $61, maintaining an “Equal-Weight” rating. This adjustment is based on an expected U.S. commission fee increase that could add $75 million in revenue and $0.13 to EPS by 2025. However, they also noted that the revised operating income for 2025 remains 2% below consensus.

Current Market Position and Potential Growth

Currently, eBay is trading above the average price target of $64.03, with the highest target at $75 suggesting a potential upside of 11.6% from the present levels.

On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more details, please refer to the Barchart Disclosure Policy here.

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