EBay Inc (NASDAQ:EBAY) stock popped 12% after reporting earnings that beat on both the top and bottom lines. In response, Bernstein’s Carlos Kirjner released a note today reinforcing the firm’s belief in eBay’s ability to grow gross merchandise volume, sales and profits as much as in the high single-digits.
At $2.23 billion, Ebay’s net revenues came in much higher than the consensus for $2.17 billion. Non-GAAP EPS, too, beat the consensus (albeit by a penny) with 43 cents per share.
Bernstein responded by updating its price target to $36 a share, about 20% higher than today’s perch of $30, and 15 times the firm’s own third-quarter to Q2 2018 earnings estimates.
The kicker for EBAY stock is in its rolling out of new browse pages derived from its structured data pages (important for search rankings and conversions) in the second half of the year.
That means that the amount of browse pages could jump from its current 15 million to “over 100 million” by year-end, driving GMV and sales.
Looking Ahead for EBAY Stock
Currently, eBay is guiding revenue in the ballpark of $2.16 billion to $2.19 billion for Q3 2016. Bernstein expects eBay to post $2.2 billion on the top line, while the broader analyst community is banking on $2.14 billion in sales.
As for next quarter’s per-share earnings, the company guided for a midpoint of 43 cents per share of EBAY stock, which is a penny less than the consensus and two cents shy of Bernstein’s estimate.
According to Kirjner:
“Even if our 2017 margin and adj. EPS estimate proves overly optimistic, 15 times is a conservative multiple for a company likely to grow EPS in the teens, as net income grows in the mid-to-high single digits, and the share count continues to decline as eBay repurchases shares. eBay bought back $500 million of stock in 2Q16, and the Board authorized another $2.5 billion of repurchases.”
Kirjner attributes eBay’s performance at the earnings confessional to the company’s structured data initiatives, believing it to be “just the beginning of a significant, multi-quarter improvement in the business’ trajectory.”
Bernstein currently rates EBAY stock with “outperform.”
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
