eBay (EBAY) Turnaround on Track, Buy the Dip - Susquehanna
Susquehanna analyst Shyam Patil reiterated a Positive rating and boosted his price target on eBay (NASDAQ: EBAY) to $38.00 (from $34.00) following results, the analyst said progress remains on track and is telling clients to buy the dip.
Patil highlighted:
- Our thoughts going forward and upcoming catalysts. The turnaround remains on track and we would be buyers on the dip. As we have mentioned before, our Positive thesis will take time to fully play out…but the solid FCF, strong capital returns (as evidenced by the aggressive buybacks), asset monetizations (MELI), and steady (to potentially improving) growth rates should provide share price upside into at least the high $30s with limited downside risk. We would use any near-term noise from concerns over 3Q GMV trends and lack of 4Q EPS guidance upside as a buying opportunity. Upcoming catalysts include intra-quarter ChannelAdvisor data, increased structured data listings coverage, and continued capital returns.
- 3Q shows that the turnaround is on track… Total GMV came in ~1% below us and consensus, with International 2% below our estimate and U.S. 1% below, but overall take rates came in 34 bps ahead of us. Take rate upside drove revenue 2% above us and 1% above consensus, with y/y revenue growth ex FX accelerating to 8% y/y (from 7% in 2Q16). Opex came in 2% lower than our estimate, and non-GAAP operating income beat us/consensus by 2%/3%. EPS of $0.45 beat us by ~4% and the Street by ~2%.
- …while 4Q guide comes in above revenue estimates, but in-line on EPS. eBay guided to 4Q revenue of $2.36-$2.41b (~$2.39b midpoint), above our previous estimate of $2.35b and in-line with consensus of $2.40b, but EPS of $0.52-$0.54 (midpoint of $0.53) came in-line with our estimate of $0.52 and consensus of $0.54.
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Shares of eBay closed at $32.52 yesterday.