eBay Lower Despite Upbeat Reports

Despite two favorable analyst recommendations, eBay (Nasdaq: EBAY) was down US$2 at$43.38 in morning trading Tuesday, erasing an early gain.

Goldman Sachs analyst Anthony Noto repeated the stock’s ranking on thefirm’s recommended list, and reports said Thomas Wiesel Partners issued abuy rating on eBay, along with a 12-month price target of $56.

“We continue to believe eBay is a core Internet holding,” Notowrote in a research note. “We are hard-pressed to find other technologystocks that have accelerating fundamentals, strong top- and bottom-linevisibility during a typically strong quarter, combined with a clearleadership position, and global expansion requiring little capital.”

A review of the company’s listings shows that “greater velocity isoffsetting slower listings growth,” Noto wrote.

“While listings growth isslower than anticipated, eBay is experiencing significant increases in othervariables that drive revenue growth — length of auction, percent take, andaverage closing price,” according to Noto.

However, the report noted, eBay “stock remains expensive,” trading at 123times estimated fiscal 2001 earnings, compared with 37.9 times earnings for other leading technology companies.

International revenue is likely to be higher than previously thought, Notowrote. According to the analyst, overseas operations will likely contribute an additional $9 million to $10 million to revenue this year.

eBay has been expanding overseas, announcing acquisitions in Italy andFrance in recent months. Earlier this month, the company said it would buy France’s iBazarGroup for stock that could total as much as $112 million.

Chief executive officer Meg Whitman called the deal “a tremendous stepforward for eBay.”

“In one strategic move, we have increased our pan-European footprint, aswell as the strength of our global trading community,” Whitman said.

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