eBay's (EBAY) Spin of PayPal 'Makes Sense'; Cowen Offers Initial Commentary

Cowen and Company offers initial commentary on eBay's (Nasdaq: EBAY) plan to spin-off its PayPal unit into an independent, publicly-traded company.

Analyst John Blackledge commented, In our view, the Paypal spin makes a great deal of sense given 1) there is manageable overlap between the two businesses (~27% of Paypal transactions as of 2Q14); 2) the Marketplaces business has been challenged competitively given strong competition from Amazon and emergent vertical retailers; and 3) the new structure should allow Paypal to be more nimble responding to emergent challenges, like potentially the new Apple pay service.

Finally, we would note that Mr. Schulman seems like a compelling choice to run the business: Mr. Schulman has experience in the payments business coming from American Express, but also has deep understanding of the mobile phone business as a former executive at AT&T and Virgin Mobile. We think Schulman's expertise running a large organization, and experience in payments and telecom could be a strong fit for Paypal as a public company.

Blackledge sees shares trading up on the news.

Cowen has eBay at Market Perform with a price target of $55.

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

eBay closed at $52.66 yesterday.

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