On Tuesday, Bernstein, a research firm, maintained its positive stance on eBay Inc. (NASDAQ:EBAY), reiterating both an Outperform rating and a $70.00 price target for the company's stock.
The affirmation came following eBay's announcement of an incremental $3 billion share repurchase program, disclosed in a recent 8K filing with no specified end date. This development is seen as a strong indication of the company's intent, although it does not provide a clear forecast of the stock buyback volume for calendar year 2025.
eBay's history of consistently buying back its own shares has been noted as part of the rationale behind Bernstein's optimistic outlook. While acknowledging that the potential for capital return is not the sole factor supporting the bull case for eBay, it is considered a significant aspect. The primary driver for the firm's recommendation is the anticipated growth of eBay's Gross Merchandise Volume (GMV), which is expected to continue improving in the upcoming year.
Bernstein suggests that the timing for investing in eBay may be more favorable following the fourth-quarter earnings call. During this call, eBay's management is anticipated to provide a formal outlook for 2025, which could include mentions of margin pressures such as UK fee changes and shipping initiatives.
These factors are known to influence the company's stock price. Despite these potential concerns, Bernstein forecasts that eBay's EBIT dollars will increase at a rate surpassing GMV growth, implying an expansion of EBIT margin as a percentage of GMV, which is considered a more critical measure.
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