eBay (NASDAQ: EBAY) announced its fourth-quarter earnings report on Wednesday, January 21 after market close, posting mixed results and revealing plans to cut roughly 2,400 positions as the split of PayPal and eBay comes closer.
Highlights from the report include quarterly earnings of $0.90 per share, up from $0.81 a share the same quarter last year. The company posted $4.92 billion in revenue, marking a 12% increase year-over-year. Analysts had expected the company to post earnings of $0.89 per share on $4.93 billion in revenue.
eBay posted first quarter guidance between $4.35 billion and $4.45 billion in revenue, below analysts’ consensus of $4.7 billion.
John Donahoe, president and CEO of eBay Inc said in a note to investors, "In a year of unexpected events and distractions, we ended 2014 with double-digit revenue growth, solid earnings growth and strong cash flow, reflecting the fundamental strengths of our company … PayPal had another strong quarter, finishing an excellent year. eBay, while facing challenges, continues to be a great business and is focused on stabilizing performance and engaging its core customers. Looking ahead, our plans are on track to separate eBay and PayPal into independent companies in the second half of 2015, and we are confident this is the right strategic path for each business."
Chief Financial Officer Bob Swan also noted that 2015 would present "real challenges" for eBay and expects that "it will get worse before it gets better."
Following eBay’s Q4 results, Cantor Fitzgerald analyst Youssef Squali reiterated a Buy rating on the company with a $60 price target on January 22. The analyst noted, “4Q:14 results were virtually in-line with Street expectations, with strength in PayPal offsetting a weakening Marketplaces. The FY:15 outlook was reduced on the lagging effects of the password reset, Google's algorithm changes and F/X headwinds. PayPal's spin-off remains on track for 2H:15 and management announced the likely sale of the Enterprise business, a positive in our view given that it should sharpen management's focus on Marketplaces post divestiture. We're maintaining a BUY rating and $60 PT based on 1) PayPal's spin-off; 2) valuation; and 3) ~$3B in authorized buybacks.”
Youssef Squali has rated eBay 20 times since January 2009, earning a 67% success rate recommending the company and a +13.7% average return per recommendation. Overall, the analyst has a 68% success rate recommending stocks and a +26.6% average return per recommendation.
Separately, Topeka Capital analyst Victor Anthony reiterated a Hold rating on eBay with a $57 price target on January 22 following the company’s Q4 earnings report. He reasoned, “The fundamentals of the Marketplace business are weak and investments at Payments are pressuring margins. As such, the shares are likely to remain range-bound until the split.”
Victor Anthony has rated eBay 14 times since April 2013, earning a 67% success rate recommending the company and a +2.5% average return per recommendation. Overall, the analyst has a 59% success rate recommending stocks and a +14.6% average return per recommendation.
On average, the top analyst consensus for eBay on TipRanks is Hold.
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