SunTrust's Bob Peck Expecting In-Line Quarter From eBay

While eBay Inc’s (NASDAQ: EBAY) US growth continues to be in-line with expectations, the company has been focusing on returning capital to shareholders, SunTrust Robinson Humphrey’s Robert S. Peck said in a report. He maintained a Neutral rating on the company, with a price target of $26.

eBay has continued to undertake various initiatives as part of its plans for platform transformation, including structuring data, product reviews, and branded shipping supplies, analyst Robert Peck noted. The company recently acquired SalesPredict and Ticketbis, which are likely to support long-term growth.

Modest Growth

eBay is likely to report its 2Q results in-line with expectations. Peck noted that ChannelAdvisor's SSS growth data suggested low-single digit US GMV growth, which is in-line with SunTrust’s ~3 percent estimate and the company’s guidance of 1-4 percent top line growth.

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The GMV, revenue and non-GAAP EBIT estimates for 2Q have been raised from $20.4B to $20.5B, from $2.16B to $2.17B and from $634M to $636M, respectively, to bring them in-line with the guidance and Street expectations.

Capital Return

“Despite slower growth, eBay has been aggressively buying back shares; we think it could also explore returning capital via dividends given the tax-related limitation through mid-2017,” the analyst wrote. He added, however, that eBay’s buybacks could be limited until mid-2017, the core business would likely generate modest growth in the near term and StubHub would face tougher comps starting in 3Q.

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