PayPal Fuels eBay's Fire

NEW YORK ( TheStreet) -- If there was any doubt about the burgeoning growth that the mobile payments business is seeing, PayPal proved the doubters wrong.

EBay's ( EBAY) third-quarter earnings were largely aided by explosive growth at PayPal, where revenue increased 23% year over year. Total payment volume rose 20% over the same period to reach $35.2 billion.

It's abundantly clear that mobile payments are seeing explosive growth, and PayPal is at the forefront.

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Barclays Capital analyst Anthony DiClemente noted that eBay (partly through PayPal) continues to see strong growth in mobile and point-of-sale systems, as it approaches $10 billion in mobile payment volume this year. DiClemente rated eBay shares equal-weight but raised his price target from $44 to $49 following the results.

PayPal recently signed a deal with Discover Financial Services ( DFS) to bring PayPal access to the 7 million merchants across the country which take Discover, starting in the second quarter of 2013. PayPal already has a deal with Home Depot ( HD).

For the entire third quarter, eBay earned 55 cents a share on a non-GAAP basis on $3.4 billion in revenue. Analysts polled by Thomson Reuters expected the online auction services company to generate 54 cents a share on $3.4 billion in revenue.

The online auction services company also provided a fourth-quarter outlook and guidance for the rest of 2012. The company expects non-GAAP earnings between 66 and 69 cents a share on $3.85 billion to $4 billion in sales. GAAP earnings are expected to be between 55 cents and 58 cents a share. Analysts expect earnings of 68 cents a share on $3.94 billion in revenue.

For the full year, eBay expects full-year revenue between $13.95 billion and $14.1 billion, with non-GAAP earnings between $2.32 and $2.35 a share. Analysts forecast earnings of $2.34 a share on $14.02 billion in revenue.

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