Analysts at Credit Suisse released a report following up on eBay Inc EBAY 3.77%‘s Q1 earnings report. Here’s a breakdown of their updated take on eBay’s future.
The Numbers
eBay reported adjusted earnings per share (EPS) of $0.77 on revenue of $4.45 billion in Q1. The earnings number was ahead of consensus estimates, while the reported revenue number was in-line.
Analysts point out strength in the company’s Payment segment and weakness from the Marketplaces segment during the quarter.
No Surprises
Analysts add that there was no data in eBay’s Q1 earnings report that warrants a change in their investment thesis. Management reaffirmed prior 2015 guidance and provided a bit of clarity on the strategy for eBay following its “divorce” from PayPal.
Analysts expect this spin-off to be completed by 3Q15.
What To Watch
Moving forward, analysts will be watching the following three metrics to determine the value of eBay as a long-term investment:
1. Acceleration in PayPal TPV growth, post-divorce
2. Gross Merchandise Value acceleration as the full benefits of Cassini are incorporated
3. Increased operating leverage resulting from aggressive marketing spend
Stock Outlook
The market seems to like what it saw from eBay’s earnings, as the stock is trading up about 3.5 percent on Thursday. eBay’s stock has had a nice run in the past six months, climbing about 17 percent.
Credit Suisse raised its price target for eBay from $62 to $66 following the Q1 earnings report. However, until the firm sees positive trends on any of the three aforementioned metrics, it will maintain a Neutral rating on the stock.
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