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Wedbush repeats 'neutral' stance on eBay ahead of results

The broker expects revenue for the three months of of $2.2bn against consensus of $2.2bn
Wedbush repeats 'neutral' stance on eBay ahead of results
Wedbush said it was remaining on the sidelines on eBay

Broker Wedbush is expecting no great shakes from online auction firm eBAY (NASDAQ:EBAY) when it posts first quarter numbers and rates the shares as 'neutral'.

"We remain on the sidelines pending signs of sustainable growth reacceleration," said analyst Aaron Turner.

Expecting revenue of $2.2bn

The broker expects revenue for the three months of of $2.2bn against consensus of $2.2bn and guidance of between $2.17 and 2.21bn and EPS of $0.48 compared to consensus of $0.48 per share and guidance of $0.46 and 0.48.

It expects the firms' gross merchandise volume (GMV) continues to be bolstered by a strong e-commerce market growth, and reckons site traffic to EBAY continued to decelerate, possibly due to revamped marketing approach, which may limit upside potential.

Wedbush also notes the continued strength of the international e-commerce market, particularly in the UK and a stable macro picture.

Recently, eBay announced it was investing $500mln into Amazon competitor Flipkart as part of a larger $1.4bn funding round.

What of the Indian exit..?

Part of this means selling its own India marketplace to Flipkart and entering into an exclusive arrangement in which eBay merchants outside of India can sell to Flipkart shoppers and Flipkart sellers can more easily sell to eBay shoppers outside of India.

Turner noted: "We believe International remains an important growth opportunity for EBAY, even in light of its recent announcement to exit the Indian market.

"While we understand the rationale behind selling eBay.in to Flipkart, we expect to hear further color around which geographies will receive the managerial focus and capacity previously allocated to eBay.."

The Wedbush price target is $34. Shares are currently up 0.4% to $34.16 each.

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January 26 2017

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