eBay (EBAY) Dips on Mixed Q2 Results, Analysts Raise PTs on Buybacks and Higher Margin Outlook
Shares of eBay (NASDAQ: EBAY) are down over 1.5% in early Wednesday trading after the company reported its Q2 results.
eBay reported EPS of $0.99 per share to top the $0.95 expected from the market analysts. However, sales were reported at $2.7 billion, lower than the consensus estimate of $3 billion.
“In Q2, on an apples-to-apples basis, all key business metrics met or exceeded expectations and revenue growth was driven by the acceleration in our payments migration and growth in advertising," said Jamie Iannone, Chief Executive Officer at eBay.
"During the quarter, we hit several important milestones in our ongoing transformation, including the transition of eBay's Classifieds business - a deal that has already delivered exceptional shareholder value - and the announcement of the sale of our Korean business.”
For Q3, eBay projects EPS between $0.86 per share and $0.90, with the midpoint of the guidance coming in below $0.90. The Q3 revenue outlook also missed on the consensus, with the midpoint of $2.455 billion coming below the $2.89 billion expected.
“A mixed bag” is how BofA analyst Justin Post described eBay’s Q2 results. Still, he moved the price target to $70.00 per share from $68.00 but reiterated a “Neutral” rating on tougher GMV trends ahead in the second half of the year.
“Despite lots of moving parts in the quarter, our overall takeaway is that eBay is doing a good job maximizing asset value (classifieds and Korea above our prior expectations), and shareholder returns, but still hasn’t turned the corner on eCommerce market share vs the rest of the industry. We raise our PO to $70, based on our higher margin outlook leading to higher EPS, with unchanged multiples and asset value vs our recent updates. Reiterate Neutral given headwinds for eCommerce sector volume growth, with preference to reopening beneficiaries (despite Delta variant risk),” the analyst said in a note.
Mizuho’s James Lee raised PT to $65.00 per share from $63.00 on the Neutral-rated stock.
“We are encouraged by eBay’s early success and believe the long-term strategy makes sense in order for eBay to be competitive and differentiated in the crowded ecommerce space. We could
become more constructive as management continues to execute on its goal of growing faster than the overall ecommerce industry through investments in products and technology,” Lee wrote in a report.
Besides Mizuho and BofA, analysts at Barclays and Credit Suisse also raised their PTs on eBay.