Analyst Robert Drubul said that the risk/reward profile for eBay is favorable now that the stock has fallen nearly 20% year to date. The stock rose 5% on Monday to $30.88.
"At these levels, and in this environment, we believe the risk/reward is favorable and see both defensive traits and positive catalysts over the next 12 months. Defensive traits include 1) a strong balance sheet, 2) robust cash flow, and 3) ~no inventory risk. Potential catalysts are 1) small business expansion, 2) monetization of Classifieds, 3) a new CEO, and 4) operational enhancements (payments, promoted listings, cost controls)," Drubul wrote.
There were recent reports that eBay was looking to sell its classified-ads unit, a division that could be worth as much as $10 billion.
EBay classifieds are mostly used overseas to advertise goods and services in local areas, much like Craigslist in the United States.
Recently, Morningstar analyst R.J. Hottovy liked the idea of eBay selling its classified business or its core marketplaces.
“We still see a place for a large C2C marketplace like eBay in the broader online commerce landscape,” he wrote in a report Friday. “But we believe it will need a more significant brand repositioning, complementary acquisitions, or operational restructuring to compete.”
EBay’s stock has languished over the past two years, sliding 12.4%, while the S&P 500 index has gained 21.3%.