eBay (EBAY) 'Neutral' Stance Maintained at SunTrust Robinson Humphrey Post Q2

SunTrust Robinson Humphrey analyst Robert Peck reiterated a Neutral rating and $58 price target on eBay (NASDAQ: EBAY) following Q2 results.

2Q POSITIVES. 1) Payments continued to grow at a robust pace (TPV +26% y/y) and segment margins expanded 150 bps y/y to 24.5%; 2) Management reiterated they are "open-minded" as it relates to PayPal strategic "alternatives"; 3) The company bought back $1.7b worth of stock at ~$51; and 4) The company stated that accounting rules (likely APB-23) triggered the cash repatriation charge in Q1, alleviating some concerns that the company was close to a large acquisition.

2Q NEGATIVES. 1) Marketplaces had a tough quarter with sold items decelerating to 9.5% growth from 11.4% and GMV declining to 8% growth y/y from 11%; 2) Marketplaces margins declined >300 bps y/y; 3) Customer Acquisition Cost (see Page 3 analysis) increased substantially; 4) Payments mix shift should continue to weigh on take rates; and 5) Guidance below our recently lowered forecasts.

The firm's 3Q EPS/revenue forecast goes to $0.66/$4.35B from $0.69/$4.36B (in-line with guidance). 2014 EPS/revenue forecast goes to $2.97/$18.15B from $2.95/$18.17B while 2015 EPS/revenue forecast goes to $3.43/$20.57B from $3.39/$20.78B.

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 $50.70 yesterday.

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