eBay: Pull-back is buy opportunity

More recently, eBay resolved selected search function issues. No one should doubt the earning power of eBay's core: the company's auction site boasts more than 89 million active users. Talk about reach! Look for a 1% to 3% revenue gain in FY2009, followed by a solid 10% to 12% revenue gain in FY2010. The First Call FY2009/FY2010 EPS estimates for EBAY are $1.54 to $1.62.

Technically, eBay's stock chart cleared $20 psychological resistance, then sold-off despite a Q3 earnings per share result that beat the consensus estimate. That suggests that end-of-the-year profit-taking by institutional investors started a little early with EBAY. Hence, view the pull-back as an opportunity to add to/establish a position. eBay will likely trade above $35 by the end of 2010.

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 one month, 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 December 2009. Sell/stop loss if you were to buy shares in this company: $7.

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.