Despite Recent Run, eBay (EBAY) Shares Still Have Tons More to Offer Investors - Barron's

April 30, 2012 3:37 PM EDT
Shares of eBay (Nasdaq: EBAY) are eschewing broader-market moves Monday following a bullish report in Barron's over the weekend.

Barron's claims Wall Street is late in recognizing eBay's moves into fixed-price retail and electronic payments. In its last quarter, eBay reported an 18 percent increase in EPS to 55 cents while Marketplace gross volume rose 12 percent and fixed-price sales popped 18 percent. For its PayPal division, total payment volume increased 24 percent with a 32 percent rise in its user base.

CEO John Donahoe, who assumed the role in 2008, has executed a three-year turnaround plan with the acquisition and sale of Skype, refocusing its Marketplace division, and expansion of PayPal into non-retail channels.

Shares trade at about 17.5 times FY12 EPS expectations, on par with Yahoo! (Nasdaq: YHOO) and cheaper than Visa (NYSE: V). Take away about $7.8 billion in net cash, and eBay's valuation gets even better.

But most of the focus lies within PayPal. At 110 million registered users who store bank and credit card data on the service, its a powerful tool for eBay. The division is currently in cahoots with Home Depot (NYSE: HD) in testing the ability for customers to make payments through PayPal via inputting only their telephone number.

Barron's recommends to "Buy It Now" and select "to my portfolio" under shipping options.

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