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ThinkEquity has initiated coverage on eBay (EBAY) with a hold rating. This is bad news for eBay as it shows one more firm is not willing to raise its bid on the stock.
According to their report, analysts at ThinkEquity believe eBay is making improvements in its search functionality and its trust and safety issues, but the company has been relatively unsuccessful at increasing its total number of users during the past few years.
eBay also faces macro-economic hurdles. Because two-thirds of eBay's operating income is generated internationally, eBay has been hurt by a strengthening U.S. dollar. And unless the sovereign debt crisis in Europe is resolved quickly, this trend will most likely continue.
ThinkEquity set its price target for eBay at $25 per share.
Analyst Expectations: Looking ahead to next quarter's earnings announcement, analysts expect eBay to earn $0.39 per share, which is two cents more than the company made during the same quarter last year.
Fundamental Analysis: eBay has a good fundamental outlook, based on the return on equity (ROE) the company is providing and the stock's PEG ratio.
eBay has an ROE of 19.25%. When you compare that to Amazon's ROE of 23.99% -- another stock in the catalog and mail order houses industry -- you can see that eBay is providing a solid return to its owners.
eBay has a PEG ratio of 1.05, which is low compared to the industry average of 1.24. Typically, a PEG ratio less than 1 is a sign the stock price is not overvalued.
Technical Analysis: eBay has gained 0.63% during the past month and is currently trading above its 20-day moving average but below its 50-day and 200-day moving averages.
Disclosure: Hansen does not own shares of the stocks discussed above. Positions can change without notice.
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Reader Comments (Page 1 of 1)
6-16-2010 @ 3:46PM
patricia ann said...
"eBay has a PEG ratio of 1.05, which is low compared to the industry average of 1.24. Typically, a PEG ratio less than 1 is a sign the stock price is not overvalued."
More voodoo economics LOL. Check Ebay's stock price - check it since John Donahoe took over. It was at 33.00 per share at that time and has never ever come close to it again in the 2 1/2 years Donahoe has been "disrupting" and destroying Ebay's business model. Yeah...go buy more stock. Ebay needs you to do that! Stop beating this dead horse and tell the investors what they need to know....buying this stock while the company is under its present management is MADNESS!
Ebay's core marketplace has been a shambles and is leaking good sellers and good buyers faster than a New York minute! Wake up!
6-17-2010 @ 8:56AM
maxdecimus said...
As both a seasoned buyer and seller on eBay, here's my take on eBays problems. 1st - The increased buyer protection program is overkill and I fell that is driving sellers off like crazy. It's getting harder & harder for sellers to make a profit. Granted something needed to be done about scrupulous sellers, but they've turned the pendulum so much to the buyer, the seller no longer has any rights. When ebay terminated negative feedback for buyers, they gave buys wide range to screw to sellers. 2nd - The rollout of sophisticated performance ratings and dashboards DSR for sellers is ridiculous. I have 33 years exp with one of largest corps in the worlds, therefore I'm familiar with these concepts but do think the average stay at home mom seller, or antique collector cares or even know whats his DSR is. The've taken California based Project Management concepts (no human involvement - 100% automation) and are trying to applying it to ebay and its not working. No one at ebay wants to get their hands dirty or have real facing with the client. Sellers now have no rights at all the buyers claim is taken as 100% factual forcing the seller to bend over. Also ebay continues to raise their commissions for selling product they don't handle. They slowly moving toward commission rates charged by brick & mortar when the auctioneer does manage the product till sold.