Hilliard Lyons Adds eBay To Its Wish List, Sets $35 Target

Hilliard Lyons’ Stephen Turner expects solid growth of global ecommerce in the near term, at more than 20 percent per year, “while slower growing developed markets including the U.S. remain underpenetrated at sub-10 percent of total retail sales.”

Turner initiated coverage of eBay Inc (NASDAQ: EBAY) with a Long-Term Buy rating and $35 price target.

Improved Growth Expected

The recent divestiture of Paypal Holdings Inc (NASDAQ: PYPL) and the sale of GSI Commerce has “narrowed eBay’s focus which we believe will allow the company to improve growth as management spends more aggressively on core eBay initiatives,” the analyst mentioned.

The company has been aggressively spending on product development, while also using structured data to enhance search engine optimization, improve cross selling via the linking of relevant items and increasing the conversion rates.

“We expect these initiatives will narrow the gap competitors have sustained by enhancing product content,” Turner stated.

Business Model

The analyst maintained a constructive view of the company’s global business model, as well as eBay’s cash flows, market position and robust balance sheet.

While eBay marketplaces contributes 68 percent of the company’s total revenue, StubHub transaction revenue accounts for 10 percent, while the remaining 22 percent comes from advertising and other service revenue.

“eBay is a highly profitable ecommerce platform and we believe, despite recent market share losses, the company can maintain profitable growth from continued industry expansion, international opportunities, and M&A,” the analyst added.

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