Analyst Defends eBay as Shares Drop 7% on Weak Guidance
2022.05.05 14:26
Analyst Defends eBay (EBAY) as Shares Drop 7% on Weak Guidance
Shares of eBay (NASDAQ:EBAY) are down over 7% in premarket Thursday after the company reported Q1 results and offered guidance for this quarter.
The e-commerce company reported adjusted EPS from continuing operations of $1.05, just above the consensus estimates of $1.04. Net revenue came in at $2.5 billion, down 5.2% YoY and above the analyst consensus of $2.46 billion.
Gross merchandise volume stood at $19.4 billion in the period, down 20% YoY and compared to the consensus projection of $19.35 billion. The number of active buyers totaled 142 million in the quarter, while analysts were looking for 147.6 million.
Looking ahead to Q2, eBay expects adjusted EPS from continuing operations in the range of 87c to 91c, missing the consensus projection of $1.02. Net revenue is expected to range between $2.35 billion and $2.40 billion, short of the analyst expectations of $2.53 billion.
“Despite the current macro headwinds, we remain confident in the long-term strategy we laid out during our Investor Day in March,” eBay said in a statement.
The e-commerce also said it sold a portion of its stake in Adyen in the first quarter for $551 million.
UBS analyst Kunal Madhukar reiterated a Buy rating and a $65.00 per share price target as he notes that the “biggest discount on eBay is the shares.”
“We recognise the outlook reflects continued uncertainty around the macro, and it’s tough to say when things will turn, but we believe the underlying turnaround story is attractive. Focus categories continue to outpace overall platform on volumes, advertising adoption is picking up, customer satisfaction improving, seller response to the changes is positive, and there is renewed focus on new product/feature launches, including the wallet, vault, and new payments options. Moreover, eBay continues to aggressively buy back shares and offers an attractive dividend, in our view. Expectations remain low, which is reflected in the valuation,” the analyst said in a client note.
Stifel analyst Scott Devitt lowered the price target to $62.00 per share from $70.00 to reflect lower guidance.
“Despite the near-term reduction in estimates, we maintain our Buy rating given the attractive valuation and capital return dynamics. The company’s investment in its focus categories and advertising platform supports better long-term visibility and a stronger growth opportunity as we move away from the challenging compares stemming from the pandemic,” Devitt wrote to clients.
By Senad Karaahmetovic
