4 Reasons Even eBay Fans Are Cautious On The Stock

1. Strong Growth Not Expected For Years

According to Cakmak, eBay is showing signs of a turnaround such as a sequential acceleration in domestic gross merchandise volume, improvements in its consumer-to-consumer segment and an increase in active buyers on the platform.

The problem is that these improvements are unlikely to generate a better-than-expected top-line growth in 2017 and a double-digit growth rate is unlikely to be seen until 2019 at the earliest.

2. Margin Pressures

Cakmak noted two factors that will impact eBay's margins moving forward. First, an unfavorable product mix toward StubHub and rising development spend for the backend of 2017.

3. International Question Marks

EBay plans on allocated resources to international markets such as India but this might not be a wise move given Amazon.com, Inc. AMZN "well-funded push" in the country. EBay's focus on the international market could also dilute management's energy and focus.

4. Valuation Concerns

The analyst highlighted eBay's three-year consensus compounded annual growth rate currently reads 3 percent for EBITDA and 7 percent for non-GAAP earnings per share, which compares to respective 2018 multiples of 11x and 15x.

However, given the absence of any opportunities for upside to estimates over the next year the analyst acknowledged he "cannot support a higher price target at this time."