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Starboard Value Sells 74% Stake in eBay; Buy With Target Price of $64

Vivek Kumar
·3 minuto per la lettura

Starboard Value announced that it sold 74% of its stake in an American multinational e-commerce corporation, eBay, during the second quarter when the activist investment firm ended its proxy fight following the hire of Jamie Iannone as the new CEO of the e-commerce company.

According to a regulatory filing on August 14, the New York-based hedge fund held 2,090,000 shares of the e-commerce company, compared to 7,920,000 it reported in on May 15 filing.

eBay reported that its revenue rose to $2.87 billion in the second quarter, from $2.42 billion a year ago, beating market estimate of nearly $2.8 billion. The e-commerce company forecast a full-year adjusted profit between $3.47 and $3.59 per share.

eBay shares ended 0.018% higher at $56.29 on Friday. The stock is up over 40% so far this year.

eBay stock forecast

Twenty-seven analysts forecast the average price in 12 months at $62.32 with a high forecast of $82.00 and a low forecast of $52.00. The average price target represents a 10.71% increase from the last price of $56.29. From those 27, 11 analysts rated ‘Buy’, 16 rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price is $64 with a high of $71 under a bull scenario and $51 under the worst-case scenario. eBay had its price target upped by stock analysts at Stifel Nicolaus from $68 to $70. The firm presently has a “buy” rating on the e-commerce company’s stock.

Other equity analysts also recently updated their stock outlook. Mizuho upped their target price on shares of eBay to $52 from $46 and gave the stock a “neutral” rating. JPMorgan Chase & Co. upped their target price to $60 from $52 and gave the stock a “neutral” rating. Benchmark upped their target price to $69 from $60 and gave the stock a “buy” rating.

BMO Capital Markets lowered from a “positive” rating to a “market perform” rating and upped their target price for the stock to $59 from $52. At last, Wells Fargo & Co upped their target price to $58 from $50 and gave the stock an “equal weight” rating.

We think it is good to buy at the current level and target $64 as 50-day Moving Average and 100-200-day MACD Oscillator signals a strong buying opportunity.

Analyst view

“Near-term trends are strong, and we remain positive payments and ads…but we think execution on eBay’s 3 new growth pillars (for sustained growth into ‘21) will be key to driving material upside from here,” said Brian Nowak equity analyst at Morgan Stanley.

“eBay has shifted its strategy to lower growth and cost rationalization and is aggressively repurchasing shares. New growth drivers, such as Promoted Listings and Payment intermediation (to be rolled out in full mid-2020) are on track.”

Upside and Downside risks

Upside: 1) eBay stabilizes and re-expands its core marketplace GMV. 2) eBay executes better than expected on the payments and promoted listings opportunities, highlighted by Morgan Stanley.

Downside: 1) core marketplace GMV continues to deteriorate. 2) eBay misexecutes on the payments and promoted listings opportunities.

This article was originally posted on FX Empire