Citi raises eBay target on strong 2Q results

On Thursday, Citi maintained a Buy rating on eBay (NASDAQ: NASDAQ:EBAY) and increased the price target to $65 from $64, following the company's robust performance in the second quarter of 2024.

To be sure, eBay's gross merchandise volume (GMV), revenue, margins, and earnings per share (EPS) surpassed expectations, signaling a return to GMV growth earlier than anticipated.

The analyst from Citi highlighted eBay's strong second quarter, noting that while the third-quarter guidance suggests a decrease, it appears conservative. The company is expected to continue its trajectory toward sustained GMV growth in the fourth quarter.

Despite the positive outcomes, eBay's increase in buyback guidance fell short of investor expectations. The guidance was raised to a minimum of $2.5 billion, up from just over $2 billion.

The Citi analyst believes this conservative update provides eBay's management with the flexibility to continue investing in growth areas with attractive returns on investment (ROI) while still offering the potential to enhance shareholder returns.

eBay reported a notable increase in profit for the second quarter of 2024, rising to $224 million from $171 million in the same period the previous year. However, the company has projected a decrease in third-quarter revenue, estimating it to fall between $2.5 billion and $2.56 billion.

This projection suggests a cooling interest in collectibles, luxury handbags, and watches, popular items on the platform.

InvestingPro Insights

As eBay (NASDAQ:EBAY) garners a positive outlook from Citi, key metrics and insights from InvestingPro further illuminate the company's financial health and investment potential. With a market capitalization of $28.16 billion and an attractive price-to-earnings (P/E) ratio of 11.05, eBay stands out in the e-commerce sector. The company's commitment to returning value to shareholders is evident through its consistent dividend growth over the last five years, underscoring its financial stability and investor-friendly approach.

InvestingPro Tips highlight eBay's impressive gross profit margins, which have reached 72.11% in the last twelve months as of Q1 2024, and a moderate level of debt, indicating a balanced approach to leveraging and profitability. Additionally, eBay's stock has experienced a significant price uptick of 34.75% over the last six months, reflecting growing investor confidence in the company's performance and strategic direction.

For investors seeking more in-depth analysis, InvestingPro features additional tips that delve into eBay's financials, market performance, and future outlook. These insights are designed to equip investors with the information needed to make informed decisions about their eBay holdings.

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