eBay has held its own, despite the recession. Hence, I'm reiterating my Buy rating for eBay (NASDAQ: EBAY) recommended on May 14, 2009, for $16.84. I you bought then, you're up about 40%.
Earlier this year, eBay sold a 65% stake in Skype for about $2.75 billion, enabling the company to focus on core operations at eBay and at PayPal.
And regarding the core online auction service, eBay has turned the corner: flattish F2009 first-half revenue should be aided by a macroeconomic tailwind in the second half, good for a 2-4% full-year increase; F2010 revenue increases should approach double-digit levels.
Meanwhile, the PayPal online electronic payment system continues to gain market share, with a solid 12-15% F2009 revenue gain seen. The First Call FY2009/FY2010 EPS estimates for eBay are $1.51 to $1.62.
Stock Analysis: eBay is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in EBAY now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your EBAY position before November 2009. Sell/stop loss if you were to buy shares in this company: $7.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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