Will This Downgrade Hurt eBay (EBAY) Stock Today?

Story updated at 9:55 a.m. to reflect market activity.

NEW YORK (TheStreet) -- eBay (EBAY) was downgraded to "sector perform" from "outperform" by Pacific Crest Monday.

Shares of eBay fell -1.3% to $50.84 in morning trading.

The online retailer is seeing weak near-term trends, and there is downside to estimates according to Pacific Crest analyst Chad Bartley.

"We acknowledge EBAY's P/E multiple is reasonable on current estimates, although shares trade at a PEG ratio of 1.25x, investor expectations are low and the challenges eBay is facing are well understood," Bartley wrote. "However, our recent checks with sellers and our Consumer Tech survey have raised concerns about growth trends in Q2 and 2H14. We expect modest growth to continue in 2014 and believe competition and investments could add to pressure on margin and earnings growth. We also see risk for a series of estimate reductions similar to 2013 and believe 2014 results could finish closer to the low end of guidance. We had previously thought estimates had been reset to reasonable levels and would eventually begin to improve."

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Separately, TheStreet Ratings team rates EBAY INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate EBAY INC (EBAY) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."

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