For Immediate Release
Chicago, IL - February 10, 2012 - Zacks.com announces the list
of stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include
eBay Inc.
(
EBAY
),
Home Depot
(
HD
),
Amazon.com
(
AMZN
),
Google Inc.
(
GOOG
) and
Mastercard Inc.
(
MA
).
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free Profit from the Pros newsletter:
http://at.zacks.com/?id=5513
Here are highlights from Thursday's Analyst
Blog:
Earnings Scorecard: eBay
Following the fourth quarter earnings announcement on January
18, more than half the analysts covering
eBay Inc.
(
EBAY
) have made downward revisions to their estimates. Decelerating
gross merchandise volume (GMV) trend, inconsistent performance by
the Marketplaces segment, European macro concerns, and intensifying
competition could be the reasons for downward revisions.
Last Quarter Synopsis
eBay's fourth quarter earnings excluding stock based
compensation came in at 60 cents, better than the Zacks Consensus
of 55 cents, aided by holiday-driven demand and strong top-line
growth, partially offset by a higher tax rate.
Revenue in the quarter increased sequentially as well as year
over year to 3.38 billion, exceeding the guidance range of
$3.20-$3.35 billion. Both transactions-based revenue (up 14.2%
sequentially) and marketing services revenue (up 12.3%
sequentially) contributed to the revenue upside.
Gross margins increased 31 bps sequentially to 70.0% due to
higher volumes, a favorable product mix and the positive impact of
recent acquisitions.
Agreement of Analysts
Of the 15 analysts covering the stock, 8 made downward revisions
for the upcoming quarter, with only 1 analyst moving upward in the
last 30 days. Also, for fiscal 2012, 12 out of 18 analysts lowered
their estimates, while 3 analysts increased theirs over the same
30-day time period. This indicates the negative sentiment of the
analysts post fourth-quarter earnings.
Analysts, by and large, believe that eBay's core business in the
US has been underperforming domestic e-commerce growth for some
time now, which can now be seen in the key international markets as
well, indicating market share losses.
They remain concerned about the relative weakness in merchant
services total payment value (TPV) growth due to the continued
negative impact from foreign currency and lack of recovery in the
rate of cross border commerce, particularly in Europe.
According to the analysts, eBay's continued investment in new
technologies and acquisitions will likely lower margins in the
coming quarters. Additionally, they believe that a combination of
decelerating GMV growth and tough comps will likely limit operating
profit growth in 2012.
However, a handful of analysts expect EBAY to deliver solid
top-line growth, driven by strength in PayPal, and expectations of
continued improvement in Marketplaces. They contend that the
fundamentals of PayPal's business will remain strong in 2012.
For the first quarter of fiscal 2012, eBay expects revenue in
the range of $3.05-$3.15 billion, down 8.3% sequentially.
Additionally, management expects total mobile payment volume to
increase to $7 billion in 2012, aided by the Paypal Mobile Express
Checkout system and Zong acquisition.
The consensus, as evident from the analyst agreement, points to
weaker performance going forward.
Impact on Estimates
Over the 30 day period, the Zacks Consensus Estimate has fallen
3 cents for both the upcoming quarter and fiscal 2012 to 43 cents
and $1.96, respectively. In the past 90 days, the Zacks Consensus
Estimate fell 3 cents for the upcoming quarter but remained
unchanged for fiscal 2012.
Conclusion
We believe that eBay is well positioned to not only expand its
PayPal segment, but also grow its Marketplace business, both acting
as positive catalysts for shares. We expect eBay's Marketplace
business to continue showing all signs of a turnaround, with
Payments continuing to gain market share, both online and
offline.
We remain impressed with eBay's strategy and execution and
believe that PayPal is well positioned for sustained growth.
Starting from the fourth quarter, Paypal announced its initial
Point of Sale (POS) test with
Home Depot
(
HD
), which was increased to 51 Home Depot stores. While this would
widen PayPal's addressable market, the success of these POS tests
is still to be seen.
PayPal's mixed funding sources between bank transfers, debit
cards and credit cards, offers cheaper payment transactions than
credit cards. We believe that this competitive advantage should
drive penetration across the Internet and broadening mobile
landscape.
However, we are concerned about increasing competition from
major online retailers, such as
Amazon.com
(
AMZN
), as well as many other smaller players. Additionally,
Google Inc.
(
GOOG
) has been eyeing the online payments space, threatening eBay's
dominance. Google Wallet has the potential to become a predominant
choice for users' mobile payments given the relationship it has
already forged with credit card giants such as
Mastercard Inc.
(
MA
) and other banks.
Currently, eBay has a Zacks #3 Rank, implying a short-term Hold
recommendation.
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AMAZON.COM INC (
AMZN
): Free Stock Analysis Report
EBAY INC (
EBAY
): Free Stock Analysis Report
GOOGLE INC-CL A (
GOOG
): Free Stock Analysis Report
HOME DEPOT (
HD
): Free Stock Analysis Report
MASTERCARD INC (
MA
): Free Stock Analysis Report
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