Baird's Colin Sebastian Reiterates Buying eBay (EBAY) On Weakness
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Baird analyst, Colin Sebastian, reiterated his Outperform rating on shares of eBay (NASDAQ: EBAY) noting some pluses and minuses in the Q3 report. Despite the puts and takes, the overall thesis appears intact.
Shares will likely trade lower given the optics around a slight deceleration in Marketplace growth (+4% Y/Y ex-FX vs. +5% 2Q16) and a conservative Q4 guide, but eBay's "re-platforming" requires a longer-term perspective. Marketplace selling trends should be stable. Importantly, overall Q3 results were solid (slight revenue/EPS beat) and management raised the full-year outlook. As such, the analyst recommends holding or adding to positions on the pullback.
Higher 2016 guidance; Q4 slightly below consensus. As a result of the Q3 revenue/EPS upside, management increased FY16 revenue guidance to $8.95-$9.0B from $8.85B-$8.95B and reaffirmed EPS guidance of $1.85-$1.90. However, implied 4Q16 revenue and EPS guidance of $2.36-$2.41B and $0.52-$0.54 were slightly below consensus of $2.4B and $0.54/share, respectively.
No change to the price target of $35.00
Shares of eBay closed at $32.52 yesterday.
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