Sell-side gives thumbs down to eBay

Carl Icahn's spinoff proposal is overshadowing weak fundamentals, says Needham's Kerry Rice, reiterating a Hold on the stock. "We believe a spinoff of the PayPal business is unlikely." The team lowers its FY2014 EPS esimate to $2.97 from $3.05 and sets 2015 at $3.45.

Susquehanna's Brian Nowak also believes a spinoff is unlikely and removes his Buy rating on the stock. "We believe it more likely that eBay stays one company and steps up its investment spending, which limits its potential for higher earnings power."

"While shareholder activism could keep a floor on the share price near-term, we see few compelling reasons to buy the stock at current valuation levels," says Topeka's Victor Anthony, also removing his Buy rating. His team cuts is FY2014 EPS estimate to $3 from $3.15. "Challenges growing the core above e-commerce, challenges monetizing off-line initiatives, and stepped-up investments at Payments, are likely to limit management's ability to post beat and raise results over the next year."

Stifel Nicolaus also downgrades to Hold.

Previous coverage of earnings/Icahn

EBAY now up just 1.7% after being up nearly 10% last night.

From eBay founder and chairman Pierre Omidyar: "I and the rest of (the) board are fully aligned that eBay and PayPal are best together."

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Comments (3)
  • Seeker137
    , contributor
    Comments (426) | Send Message
    Ebay forces anyone selling items on ebay to accept PayPal (money orders and checks are verboten). PayPal is ebay's cash cow and they aren't going to relinquish that any time soon.
    23 Jan 2014, 01:30 PM Reply Like
  • Alex Cho
    , contributor
    Comments (2747) | Send Message
    No one said Carl Icahn was on expert on eBay. Putting that aside, eBay hasn't really gone anywhere in 2013.
    23 Jan 2014, 02:15 PM Reply Like
  • Seeker137
    , contributor
    Comments (426) | Send Message
    On the contrary, I'm fairly certain that Carl Icahn knows something, and that this is not just another quick money grab. In all actuality, this is a strategic “chess move” by Icahn because he sees what looms on the horizon for ebay (and it’s not good) and he sees the enormous expanding future potential for PayPal. Whereas ebay is clearly being propped up by PayPal, if nature is allowed to run its course, ebay will end up dragging PayPal down with it. Splitting them up while there is still time would be the best course of action.
    24 Jan 2014, 12:38 PM Reply Like
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