In a research note to investors, Citi analyst Mark May speculated on a potential eBay  (EBAY - Get Report) takeover. Amid an increased M&A environment, May sees the e-commerce company as one of the "more likely" targets in his coverage universe, with eBay's business turnaround making the company more appealing to possible suitors.

TAKEOVER TARGET: With increased talk of a likely wave of M&A activity in the markets, Citi's May sees eBay as one of the "more likely" targets in his coverage universe. The analyst views the company's recent business turnaround under the leadership of CEO Devin Wenig as a positive for the prospects of a possible acquisition. Management's ability to reaccelerate growth lowers the risk of investors catching a "falling knife," he contended. May acknowledged that an acquisition of this size would need a long period of due diligence, but he believes eBay is well positioned for it to happen. The company's fundamentals are now improving with dry powder for upside the next few quarters, but the stock has yet to catch up from a valuation perspective, May told investors. A buyer, if there was interest in eBay, may want to get ahead of a potential beat and raise cycle, he noted. The analyst reiterated a Buy rating and $34 price target on the shares.

POSSIBLE SUITORS: May believes there may be a wide range of companies that could potentially have an interest in acquiring eBay. Among the suitors may be foreign eCommerce companies wishing to expand their global footprint, such as Alibaba  (BABA - Get Report) , along with digital media companies looking to add transactional capabilities to their media properties, like Google's parent Alphabet  (GOOG - Get Report) ; (GOOGL - Get Report) , the analyst speculated. Furthermore, May sees incumbents in both media and retail seeking to strengthen their digital footprint, like Wal-Mart  (WMT - Get Report) , and private equity companies as potential suitors in a possible takeover of the e-commerce company.

PRICE ACTION: In morning trading, shares of eBay rose about 1.5% to $31.17 per share.

Reporting by Jessica de Sa-Mota.

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