Axiom: Buy eBay Ahead Of The PayPal Spinoff

In a report published Monday, Axiom analyst Victor Anthony reiterated a Buy rating on

, as well as the $70 price target, ahead of investor meetings with the designated CEO and CFO of eBay and PayPal. While the analyst believes that the primary concern for investors would be "growth rate challenges at eBay and rising competition for PayPal," he also believes that there would be "stabilization at eBay continuing against easier comps in 2H15." "[W]e are now optimistic that PayPal can weather the bevy of global competitive threats," Anthony stated. Related Link:

Investors had previously been concerned regarding the continuing impact of SEO and the data breach. However, the company expects to have resolved these issues, which had adversely impacted growth in 2014. Other issues that had adversely impacted growth were FX headwinds, ASP declines due to greater listings mix from the emerging markets, competitive pressured being faced by StubHub and the overall intense competition in the eCommerce markets globally. "Investors will be looking for how eBay plans to overcome these challenges, although out of all of them, the FX impacts are beyond management's control," Anthony said, adding that he was optimistic that "the business is stabilizing and is likely to return to growth closer to that of e-Commerce, given that both sold items growth and International GMV growth accelerated in 1Q." The company is also focused on improving its product and branding, as well as on strengthening its technology infrastructure in order to improve structured data utilization, which in turn is expected to drive growth, going forward. "The Payments business faces a bevy of competitive threats across the globe, there has been issues of management turnover over the past year, the partnership with large retailers for the POS option has stalled, and there has been investor concern about lack of innovation," according to the Axiom report. The analyst believes that investors would expect the new management team to address these issues during the investor meeting, along with additional issues associated with regulation, especially in Europe. Investors would also look for reassurance that PayPal would be able to withstand competition while continuing to grow its margins, free cash flow and top line.