Deutsche Bank analyst Kunal Madhukar lifted his rating on the stock to buy from hold and his price target to $57 a share from $42.
While the stock’s strong recent rally - 80% in the past three months - “could fade when the ongoing demand surge alleviates, … eBay is not getting credit for the sales it likely would be able to retain on the platform,” he wrote in a commentary cited by Barron’s.
Buyers are reporting positive experiences with eBay, Madhukar said. He also says the analyst consensus earnings forecast isn’t high enough, since it fails to encompass much if any growth in the second half of the year.
EBay should get more credit in the market for its payments business, which will help boost earnings, Madhukar said according to Barron’s.
He says eBay’s valuation is attractive compared with the S&P 500 and other e-commerce stocks.
The San Jose, Calif. auction house and retailer has a forward price-earnings multiple of just under 16, according to Morningstar. That compares to almost 25 for the S&P 500 as of June 19, according to Birinyi Associates.
Meanwhile, SunTrust Robinson Humphrey increased its share-price target to $54 from $50, leaving its rating at hold.
EBay is enjoying “a Covid-induced boost to e-commerce, which is bringing in new customers/reactivating old ones,” the firm wrote in a report cited by Bloomberg.
But eBay “may not be able to hold on to these customers” after the pandemic, which means its strong growth in gross merchandise volume “may not be sustainable in a more normalized environment.”
EBay shares recently traded at $50.88, up 3%.