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On Thursday, Citi analysts reaffirmed their Buy rating on eBay stock (NASDAQ:EBAY), maintaining a price target of $80.00. Trading near its 52-week high of $71.61 and showing an impressive 58.78% return over the past year, the stock has demonstrated strong momentum. The endorsement comes despite eBay’s first-quarter guidance falling below market expectations and a sequential slowdown in Gross Merchandise Volume (GMV). According to InvestingPro analysis, the company appears slightly undervalued based on its Fair Value calculations. Citi’s analysis highlighted the company’s fourth-quarter 2024 results and 2025 GMV projections, which were largely above analyst predictions.
In their commentary, Citi analysts acknowledged the market’s reaction to the first-quarter outlook but emphasized their positive view of eBay’s product innovation efforts. With impressive gross profit margins of 72.02% and a GOOD overall Financial Health Score from InvestingPro, eBay has shown more consistent trends than in previous years, thanks to strong product development, including the creation of its proprietary large language models (LLMs) and the successful implementation of Generative AI (GenAI).
The analysts also noted eBay’s strategic focus on expanding its Focus Categories, which has been bolstered by targeted mergers and acquisitions, such as the acquisitions of Goldin and Caramel. Additionally, eBay’s partnerships with third parties, including Facebook (NASDAQ:META) Marketplace and OpenAI Operator, were mentioned as factors contributing to the company’s potential for growth.
Despite facing some one-time headwinds in 2025, eBay’s margins are expected to remain stable. Citi’s analysts pointed out that eBay’s management is committed to share buybacks, further signaling confidence in the company’s financial strategy. InvestingPro data reveals that eBay has consistently raised its dividend for 6 consecutive years, with an 8% dividend growth in the last twelve months. For deeper insights into eBay’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Citi’s outlook for eBay is also underpinned by the belief that the company is relatively well-positioned to navigate the consumer macro environment. This perspective suggests that eBay’s recent initiatives and partnerships may help the company to weather potential economic challenges ahead.
In other recent news, eBay reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $1.25 compared to the forecast of $1.21. Revenue for the quarter was $2.6 billion, slightly above the anticipated $2.58 billion. Despite these positive results, Goldman Sachs maintained a Sell rating on eBay, although it slightly raised the stock price target from $55 to $56. The firm noted that eBay’s Q4 performance was strong, but it expressed concerns about the company’s guidance for Q1 2025, which suggested a challenging demand environment.
eBay’s management pointed out several headwinds, including a weaker market for discretionary eCommerce purchases and broader macroeconomic uncertainties. The company continues to be affected by the gradual implementation of its UK consumer-to-consumer (C2C) initiative, which aims to enhance its market presence. Looking ahead, eBay expects low single-digit growth in gross merchandise volume (GMV) on a foreign exchange neutral basis for 2025, with revenue growth projected to be slightly higher. The company anticipates that non-GAAP operating margins will remain stable, with operating income growing in line with revenue.
eBay plans to repurchase at least $2 billion in shares in 2025, signaling strong confidence in its financial health. The company is also investing in AI and expanding partnerships to drive future growth. Despite the challenges, eBay’s strategic initiatives, including advancements in AI and focus categories, are expected to support continued GMV growth and robust earnings per share in 2025.
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