7 eBay Analysts Provide Key Takeaways On Positive Q4 Earnings, Outlook

Shares of eBay Inc EBAY climbed in premarket trading on Wednesday, after the company reported higher-than-expected sales and earnings for the fourth quarter.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• Piper Sandler analyst Thomas Champion maintained an Overweight rating, while raising the price target from $50 to $52.
• Goldman Sachs analyst Alexandra Steiger reiterated a Sell rating, while lifting the price target from $38 to $40.
• Mizuho Securities analyst James Lee reaffirmed a Neutral rating, while raising the price target from $40 to $44.
• BMO Capital Markets analyst Brian Pitz maintained a Market Perform rating, while raising the price target from $49 to $53.
• Benchmark analyst Daniel Kurnos reiterated a Buy rating, while lifting the price target from $56 to $58.
• Needham analyst Anna Andreeva reaffirmed a Hold rating on the stock.
• JMP Securities analyst Nicholas Jones maintained a Market Perform rating on the stock.

Check out other analyst stock ratings.

Piper Sandler: Gross merchandise value (GMV) came in around $18.6 billion for the fourth quarter. That's up 2% year-over-year, “while GMV ex-FX was closer to flat,” Champion said in a note. “Both domestic (flat) & international (+3.5% y/y) exceeded expectations,” he added.

“Restructuring announcements from January will lower headcount by ~9% and allow room to reinvest or return capital to shareholders,” the analyst further wrote.

Goldman Sachs: There was "stronger GMV performance supported by improving trends intra-quarter towards the end of November (particularly in the US),” Steiger said. While GMV is expected to decline in the first half of 2024, following a slower January, the company is likely to “return to positive FXN growth” in the back half, he added.

“Non-GAAP operating margins are expected to expand in 2024 (+60-100bps vs. 2023) despite more muted demand trends supported by continued efficiency gains and cost actions,” the analyst stated.

Mizuho Securities: “GMV beat expectations due to rebounding holiday demand and continued product improvements,” Lee wrote. “Focus categories growth continued to outperform by 7 points, with strength coming from P&A and supported by eBay's international shipping and CBT,” he added.

While monetization of advertising improved during the quarter, there is still room for further growth, the analyst said. “As a result, 1Q24 and FY24 guidance are tracking ahead of expectations,” he noted.

BMO Capital Markets: “UK/Germany remain challenged given broader macro, which offsets effective product initiatives for now,” Pitz said. “GPU capacity will double sequentially in 1Q24 as generative AI continues to be implemented across the platform, while the CAPEX outlook of 4-5% remains in line with historical trends,” he added.

The analyst raised the GMV estimate for 2024 from $73.1 billion to $73.7 billion, while keeping revenue projections unchanged on lower-than-expected take-rates in the fourth quarter.

Benchmark: San Jose, California-based eBay exceeded consensus “across the board for 4Q,” Kurnos said. “More importantly, however, was the outlook, which not only started the year on a positive note, avoiding the pitfalls seeming to plague the broader ecommerce universe, but also called for a return to FX-neutral GMV growth in the back half of the year, assuming a stable macro,” he added.

“We do not think the momentum is over yet, either, with the potential 2Q Adevinta tender still ostensibly not reflected in the share price, and what effectively amounts to building focus category growth despite some of eBay’s largest international markets being in recessionary environments,” the analyst further wrote.

Needham: Although eBay made a slow start to the fourth quarter, demand improved in late November and December and “especially in the US with value consumer,” Andreeva said. “Focus categories are working (grew MSD in '23 at almost 30% penetration), and # of active buyers has been flat for [three] quarters (churn stabilizing, activations growing),” she added.

While eBay’s quarter-to-date performance has been choppy, the company expects FX-adjusted GMV to grow in the final two quarters of 2024, the analyst stated.

JMP Securities: It's a challenging international macro environment for eBay, Jones said. The UK is “in a technical recession” and ecommerce growth has been negative in Germany for several quarters.

However, eBay’s focus categories “remain a bright spot, outperforming the broader marketplace by six points in the quarter.” Alsp, its 1P ads business grew by 33% year-on-year in the fourth quarter.

EBAY Price Action: Shares of eBay had risen by 5.59% to $46.87 in the premarket session on Wednesday.

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