EBay Trading Higher on Strong PayPal Results Ahead of Spinoff
Investors are buying shares of eBay (NASDAQ:EBAY) after the company reported better than expected quarterly results driven in part by its PayPal unit which is expected to be spun off in the third quarter.
“We had a strong first quarter, with eBay and PayPal off to a good start for the full year,” said eBay Inc. President and CEO John Donahoe.
PayPal net total payment volume (TPV) grew 18% in the first quarter to $61 billion, while it gained 3.6 million new active accounts in the quarter, up 11% to 165 million, and processed more than 1 billion transactions in the quarter, up 24%.
Paul Vogel, an analyst at Barclays expects this growth to continue saying: “While overall growth is still sluggish at marketplaces, the lack of incremental downside coupled with a pretty strong quarter at PayPal should provide some upward momentum for eBay.” Vogel raised his price target on eBay to $67 from $62.
The payments units helped revenue expand by 4% to $4.45 billion, while profits were $943 million, or adjusted earnings of 77 cents a share. This compared to earnings of $96 million, or 79 cents a share, in the same period a year earlier. Both exceeded analyst estimates.
Shawn Milne, an analyst at Janney believes eBay’s playbook of driving traffic to its top-rated sellers should ultimately improve the buying experience, and an improving search/selection and an improved buying experience should further stem market share losses. He also expects strong growth at PayPal.
“We believe the separation creates the opportunity for eBay/PayPal to execute with more focus and thus potentially becoming more attractive for M&A,” notes Milne.
Ebay now expects to earn as much as much as $3.15 per share for 2015 with revenue reaching as much as $18.8 billion.
At least fifteen analysts raised their price targets on the shares, according to Thomson Financial, including Citigroup which expects the shares to reach $68.
Ebay now expects to earn as much as much as $3.15 per share for 2015 with revenue reaching as much as $18.8 billion.
At least fifteen analysts raised their price targets on the shares, according to Thomson Financial, including Citigroup which expects the shares to reach $68.