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EBay's Earnings: What Wall Street Expects

Stocks in this article: EBAY

So now it's back to business for eBay, and the pressure will likely be rising to prove that PayPal is better in the eBay family and that management can put Icahn's critique to rest for good.

During the quarter, eBay focused on promoting store listings by offering free listings for eBay stores of 2,500 items that expanded to all sellers at the end of March. "We believe more listings create supply attracting incremental demand," JMP Securities analyst Ronald Josey wrote in a note on Monday.

Also TheStreet's Antoine Gara notes to watch for any commentary on eBay's Russian expansion plans giving rising economic sanctions.

The company will hold a conference call starting at 5 p.m. EDT to discuss the results.

Here's what Wall Street analysts are expecting from eBay's earnings tonight:

Youssef Squali, Cantor Fitzgerald (Buy; $65 PT)

We anticipate eBay's 1Q:14 results should be in-line with muted Street expectations. Our checks indicate a pick-up in Y/Y growth for U.S. Marketplaces and U.S. e-commerce in 1Q:14 vs. 4Q:13 levels, which bodes well for 1Q results in general. With pressure from Icahn waning, we believe that talk of a PayPal spinoff will take a backseat to renewed focus on how well eBay does operationally in the next few quarters. We continue to like EBAY as a value play for 2014.

Ronald Josey, JMP Securities (Market Outperform; $60 PT)

After resetting guidance in 4Q, we believe eBay had a strong 1Q as domestic eCommerce trends improved throughout the quarter and listing fee promotions in March may have helped spur demand. The question is whether it will matter, and we believe better results coupled with shares trading at 16x our 2015E EPS of $3.31 suggest the risk/reward remains favorable. During earnings, we'll be watching: 1) Marketplaces domestic growth & international improvement; 2) Any insights into Marketplaces' new Defect Rating; 3) Merchant Services TPV & Payments Take Rate; 4) Progress at eBay Now; and 5) 1Q14 Profitability & Buybacks. We continue to believe eBay is well positioned to take share in eCommerce given its Omni-channel and mobile strategy, local efforts, and we are positive on PayPal overall.

Edward Williams, BMO Capital Markets (Outperform; $64 PT)

We expect eBay to report results in line with the company's guidance. Recent growth trends for the company have been driven by its payments category as well as its non-auction e-commerce category; we expect both trends to remain. We also anticipate that the company continues to benefit from the rise in mobile devices - as consumers increasingly use their smart phones to shop online. We believe eBay will still be able to take advantage of longer-term e-commerce trends that we believe are in its favor.

Justin Post, Bank of America Merrill Lynch (Buy; $68 PT)

Still our top eCommerce stock in a tough market. We think the relative 1Q set-up is favorable due to positiveCA data, conservative 1Q EPS guidance, aggressive share repurchase activity in1Q (28mn shares per eBay prelim. proxy), and likely focus on 1Q execution givenrecent shareholder activism; but we acknowledge eBay is reporting in a toughmarket environment. As we look forward, eBay has easier comps as the yearprogresses, a potentially improving environment in Europe and Korea, and hopefullythe tech team has some product improvements planned after a disappointing 2013.

 --Written by Laurie Kulikowski in New York. Antoine Gara contributed to this article.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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