eBay Gains as Strong Outlook Offsets Analysts' Doubt on Volumes

(Bloomberg) -- Shares of eBay Inc. gained in early trading on Wednesday, after it reported strong first-quarter results and gave an upbeat outlook.

While analysts expressed some caution about the company’s gross merchandise volume (GMV) and Marketplaces business, the takeaway was broadly positive, with at least four firms raising their price targets.

The stock gained as much as 5.2 percent, putting it on track for its highest close since June. With the day’s advance, the stock is up nearly 50% from a December low.

Here’s what analysts are saying about the results:

JPMorgan, Doug Anmuth

“We were surprised to see eBay drive revenue and EPS upside despite lower GMV.”

“Continue to be constructive on eBay’s focus on Promoted Listings & Payments, but we also recognize that these opportunities come with execution risks.”

Affirms neutral rating, price target raised to $39 from $36.

Deutsche Bank, Lloyd Walmsley

Company reported “significantly better than feared results” and it “appears to be on track to achieve its objective of $1B in advertising revenue.”

Affirms buy rating and lifts price target to $42 from $39.

Citi, Mark May

“While GMV growth remains a concern, lower promotional spending and solid Promoted Listings growth continue to support take-rate/revenue growth.”

Affirms buy rating and $40 price target.

Benchmark Co, Daniel Kurnos

“A reduction in contra revenue without any major negative visible consequences and strength in promoted listings underpins our view that there will continue to be cash flow outperformance.”

Affirms buy rating, price target raised to $45 from $42.

RBC Capital Markets, Mark Mahaney

Results were “much of the same” with “not much to celebrate.”

Sees full-year outlook implying “continued declines in its core U.S. GMV.”

Affirms sector perform rating, price target increased by $1 to $34.

Morgan Stanley, Brian Nowak

Marketplaces “fundamentals continue to deteriorate and now decline,” and there is a “still-existing need to invest to fix” the division.

Raises price target to $34.50 from $33, but drops sum-of-the-parts valuation to $31 from $33 “as we are shifting earnings power from a high multiple asset (StubHub) to a lower multiple asset (Marketplaces).” Affirms equal-weight rating.

(Updates stock and chart to market open.)

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm, Courtney Dentch

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