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The market's May 6 'flash crash' has created an opportunity for investors with eBay Inc. (EBAY), first discussed here on May 14, 2009 at a price of $16.84. Look for eBay's revenue to increase 8-10% in 2010, followed by a likely, double-digit gain in 2011, led by online auction growth and an impressive 20-25% revenue increase by payment service PayPal.
eBay's earnings core remains its auction site boasts more than 89 million active users, and there are ample opportunities for international market growth, particularly in emerging markets.
Meanwhile, PayPal is the internet's top pure-online payment system, with more than 81 million accounts; internet telephone operation Skype (eBay owns a 30% stake), and aftermarket ticket seller StubHub add to the positive story.
The First Call FY2010/FY2011 EPS estimates for EBAY are $1.67 to $1.84. Each EPS estimate looks about 5% low, according to my analysis.
Technically, as noted, the market's May 6 'flash crash' erased an impressive 2010 stock gain for EBAY, but the stock held support at/nears $22. Hence, the calculation here is that EBAY is very attractive at this level, assuming healthy credit markets in the quarters ahead.
2010 Outlook: I view eBay as a long-term play, but if investors are looking to sell EBAY within the year, it's probably best to take your profits after it rises to $28-29, if it fails to rise above $30.
Stock Analysis: I consider eBay Inc. to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd 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, I wouldn't buy more than 75% of my EBAY position before June 2010 and I'd put a sell/stop loss at: $7.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
The First Call FY2010/FY2011 EPS estimates for EBAY are $1.67 to $1.84. Each EPS estimate looks about 5% low, according to my analysis.
Technically, as noted, the market's May 6 'flash crash' erased an impressive 2010 stock gain for EBAY, but the stock held support at/nears $22. Hence, the calculation here is that EBAY is very attractive at this level, assuming healthy credit markets in the quarters ahead.
2010 Outlook: I view eBay as a long-term play, but if investors are looking to sell EBAY within the year, it's probably best to take your profits after it rises to $28-29, if it fails to rise above $30.
Stock Analysis: I consider eBay Inc. to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd 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, I wouldn't buy more than 75% of my EBAY position before June 2010 and I'd put a sell/stop loss at: $7.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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Reader Comments (Page 1 of 1)
5-11-2010 @ 5:41PM
william lindblad said...
Dream on.