Investors of eBay Shouldn’t Worry About Amazon, Inc. (Nasdaq: AMZN) may be the gold standard for e-commerce investors, but it’s certainly not the only game in town. D.A. Davidson analyst Tom Forte has initiated coverage of eBay (EBAY) with a “buy” rating and says the online auction giant has plenty of growth levers to pull in coming years.

According to Forte, artificial intelligence software and machine learning will likely provide eBay’s business with a major shot in the arm.

“With a larger selection, lower prices on a number of items and a sales tax advantage in several states, we believe eBay can compete with Amazon for the long term,” Forte wrote. “Among our covered companies, we believe it has the best chance to drive 100 basis points of incremental revenue growth from its AI and machine learning efforts.”

Forte also says eBay has room to improve its rankings and search results on Google (GOOGGOOGL), which could help drive traffic to its platform.

He says management made the right call by emulating Amazon Prime’s guaranteed three-day shipping for 20 million eligible products and even offering free shipping on a portion of those products. EBay is refunding the shipping cost of guaranteed delivery items that take more than three days to arrive and providing coupons if the shipping was already free.

In the long term, Forte says eBay’s balance sheet is strong enough that management could also choose to attract a different class of investors. He says the company could easily afford to implement a share buyback program or even begin paying a dividend.

Over the next three years, D.A. Davidson is forecasting 4.1 percent compound annual revenue growth for eBay. The company has…

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