eBay (Nasdaq: EBAY) erased an early gain to trade down 88 U.S. cents at $33.75 by midmorning Friday, after Goldman Sachs analyst Anthony Noto confirmed the stock's position on his firm's Recommended List.
The stock rose as high as $35.25 in early trading.
"We believe eBay is likely to exceed our first-quarter 2001 total revenue estimate of $150 million, at $160 million, and our earnings per share estimate of 8 cents," Noto wrote in a research note.
EBay's auctions generally close in 5.8 days, compared with 6 days in the fourth quarter, and the company is getting more revenue from each auction, Noto wrote. The average selling price of an item on eBay is also going up, rising to almost $45 this quarter from $41 last quarter as new categories like consumer electronics gain in popularity, he wrote.
"We continue to believe eBay is a core Internet holding," wrote Noto. "While we recognize that the stock remains expensive, we are hard-pressed to find other technology stocks that have accelerating fundamentals, strong top- and bottom-line visibility, a clear leadership position, and global expansion potential requiring little capital in the deteriorating economic environment."
Noto acknowledged that eBay shares could fall further as the company enters the traditionally slow summer selling season. However, he said, "we would be buyers of the stock ahead of a visibly strong quarter."
eBay recently announced an alliance with
Microsoft that will integrate eBay's auction services 
into MSN, the
Carpoint automotive site and WebTV. The two companies said they would also
develop new e-commerce applications.
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