Bear Ups eBay to 'Outperform', Stock Is Too Cheap

Bear Stearns Internet analyst Robert Peck Thursday morning upgraded eBay (EBAY) to Outperform from Market Perform, asserting that the stock has become too cheap.

“In the end of 2007 we believed that the investor sentiment pendulum which oscillates between the extremes of Greed and Fear had swung too far towards greed,” he writes. “However, at historical valuation lows, we believe that eBay’s issues have been overly accounted for and that the pendulum has swung too far toward fear.” Ergo, he upgraded, and set a $36 price target.

Peck contends investor concerns about a recession, competition from Amazon.com (AMZN) and the notion that eBay is “structurally broken” have “suppressed eBay’s valuation.” He notes that the stock is trading at “historical valuation lows” of 17.6x earnings and 10.2 EBITDA. And he says there are catalysts ahead, including a new fee structure for sellers and earnings next week. Peck thinks the company could provide 2008 guidance above his current estimate of $1.60 a share.

Thursday morning, eBay is up 42 cents, or 1.5%, at $28.51.

Comments

[2braincells:]

I don't know where you do you research. Here are some facts... Note the surge in September'07 into October. Ebay had a FREE listing sale the month of September... makes sense? That explains why the first couple of weeks in October look good also, ten day listings placed for free on the last day of September would overflow. They've not been able to gain that momentum since. They ran a listing sale in December, but it was not as good as the September sale as it was still expensive for sellers to list items, ergo the lackluster results in stock movement.

I keep reading that investors cringe at the idea of ebay lowering fees, but, this isn't rocket science... they're shooting themselves in the foot by being intractible. Why should it be an obtuse idea that everyone can win on ebay... buyers, sellers, investors and ebay?

2008 Jan 21 04:29 AM