Credit: In a research report issued to clients and investors on Monday, analysts at Stifel Nicolaus upgraded eBay Inc. ( EBAY ) from a "hold" rating to a "buy" rating. The set price target for eBay was $65.
eBay shares rose 0.6% in response to close at $55.15.
Rating Rationale
Calling eBay "the real deal" in U.S. commerce, analysts Scott Devitt and Ansel Parikh of Stifel upgraded their rating on the stock.
eBay's plan to spin off PayPal - its rapidly-growing payments business - into a publicly traded company in the second half of 2015 is an important reason for the upgrade.
The analysts believe that the next 12-18 months should be good for eBay, as it is well positioned for a corporate spin that could drive its shares.
They are of the opinion that if this spin-off is "carried out flawlessly and accepted by investors," the share price can increase up to $75. They see very limited downside in eBay shares.
In the second half of the next year, Devitt expects eBay's Marketplaces gross merchandise volume to grow. This is based on a favorable comparison with this year, which was marked by a hacker attack and changes to Google's ( GOOGL ) search engine algorithm.
They predict a $2:$1 risk/reward on a base case and $3:$1 on a bull case. A 2:1 ratio will allow the investor to double their money.
An Outlier
The rating upgrade from Stifel Nicolaus gave eBay a gentle lift on Monday. However, eBay proved to be an outlier on a negative day for the technology sector.
Other bellwethers like Apple Inc. ( AAPL ), Hewlett-Packard Co. ( HPQ ) and Microsoft Corp. ( MSFT ) all ended the day in the red.
Ratings of Other Firms
Analysts at S&P Equity Research restated a "strong-buy" rating on shares of eBay while, analysts at Evercore ISI downgraded shares of eBay from a "hold" rating to a "sell" rating. Analysts at Morgan Stanley had initiated coverage on shares of eBay in a research note on Oct 29. They set an "underweight" rating and a $45.00 price target on the stock.
eBAy carries a Zacks Rank #3 (Hold). For the current year, eBay has witnessed 12 downward estimate revisions in the last 60 days and no upward revisions.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
