Jefferies Sees eBay (EBAY) Results As Mixed

Jefferies analyst, Brian Pitz , sees eBay's (NASDAQ: EBAY) financial metrics as ahead of expectations but with operating metrics that were a bit soft. Guidance also came in mixed with soft margins overshadowing good top line growth. Despite progress in key strategic initiatives (e.g. transition to structured data), more time is needed before any expected benefits start showing up in results (more likely toward end of 2016). No change to Hold rating but PT increases to $27 (from $25).

Net rev of $2.14B was up 4% Y/Y (up 6% Y/Y FX-neutral), slightly ahead of consensus ests at $2.08B and above the high end of guidance. Adj EBITDA came in at $869MM vs. cons at $843MM while stock buybacks of ~$1B in the quarter helped for nonGAAP EPS beat of $0.47 vs. Street expectations of $0.45. Transaction revenues increased 1% Y/Y to $1.68B (+3% Y/Y FX-neutral / flat from Q4) on continued use of coupons and seller incentives. Marketing Services and Other revenues increased +17% Y/Y to $460MM (up 19% Y/Y FX-neutral / ~800bps acceleration from Q4).

Active buyers increased 4% Y/Y (100bps deceleration from Q4). Global GMV grew 5% Y/Y on FX-neutral basis (flat sequentially) while US GMV growth decelerated 100bps over Q4 on weak Marketplace growth (continuing headwinds from SEO, mobile and C2C). StubHub delivered another solid quarter with GMV and revenue growth of +29% Y/Y and +34% Y/Y, respectively. Classifieds had a strong quarter too, with particular strength in the UK and Germany. Overall take rate declined 10bps Q/Q (-10bps Y/Y).

During the quarter, eBay repurchased approximately 42.3MM shares for an aggregate of $1.0B. Its remaining authorization as of Mar 31, 2016 was $0.8B.

For 2Q16, mgmt expects net revenue of $2.14-$2.19B with roughly 200bps FX impact, non-GAAP EPS of $0.40-$0.42 and GAAP EPS of $0.32-$0.34 vs. cons at $2.14B, $0.44 and $0.35, respectively. For FY16, mgmt firmed up the outlook and now expects net revenue of $8.6-$8.8B (3% to 5% FX-neutral growth) vs. $8.5-$8.8B (2% to 5% FX-neutral growth) before.

The $27 price target is based on a 10-year DCF (12% WACC and 4% LTGR).

For an analyst ratings summary and ratings history on eBay click here. For more ratings news on eBay click here.

Shares of eBay closed at $24.49 yesterday.

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