Upbeat analysts lift eBay's stock

EBay shares extend rally as several analysts raise price targets, others see rosy future

Associated Press

SAN FRANCISCO (AP) -- EBay Inc.'s stock climbed Monday as investors reacted to analysts' forecasts predicting the company's online bazaar and digital payment service will play increasingly important roles in how people shop in the future.

THE SPARK: At least five different analysts issued optimistic reports about eBay on Sunday and Monday. The rosy scenarios were based on information culled from management presentations last Thursday. Among other things, eBay raised its long-term financial guidance through 2015 and highlighted the San Jose, Calif.-based company's inroads on the mobile devices that are morphing into digital wallets and shopping assistants for online and offline purchases.

J.P. Morgan analyst Doug Anmuth, Canaccord Genuity analyst Michael Graham and Jefferies teams of Internet analysts were so impressed with what they heard that they all raised their price targets on eBay shares. Anmuth boosted his target from $64 to $65, while Graham went from $56 to $67 and the Jefferies analysts jumped from $62 to $66. Although Wedbush analyst Gil Luria and Nomura analyst Brian Nowak didn't touch their price targets, they reiterated their previous eBay endorsements and embraced the company's strategy.

THE BIG PICTURE: EBay has been thriving in recent years, propelled by a series of changes that made the shopping experience on its website more convenient for consumers and merchants alike. At the same time the company's PayPal payment service has been steadily expanding its reach to open up new moneymaking opportunities, especially on mobile devices and offline cash registers that either already are or soon will be accepting PayPal. About 123 million accounts have now been set up on PayPal, which eBay bought in 2002.

The company's recent success has been orchestrated by John Donahoe, who replaced Meg Whitman as eBay's CEO five years ago. EBay's market value has nearly doubled under Donahoe's leadership.

To help spur more sales, eBay is about to introduce a new search engine on its website called Cassini that will include more detailed descriptions about merchandise. PayPal also will soon be accepted at 7 million offline merchants who take the Discover card, an addition that will bring in more revenue.

EBay underscored its confidence in its future last week by predicting that the company will be involved in $300 billion in worldwide sales in 2015, up from $175 billion last year.

THE ANALYSIS: "We believe eBay's management team...is among the best in the Internet space, and has the company focused on the customer experience, technology, and execution," Anmuth wrote in his research report.

SHARE ACTION: EBay rose $2.06, or 3.8 percent, to $56.28 in afternoon trading. The stock has ranged from $35.31 to $57.27 in the past year.

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