UPDATE 1-JP Morgan downgrades eBay; 7 others cut price targets

giovedì 16 ottobre 2008 18:04

 (Changes source, adds details, share movement)
 Oct 16 (Reuters) - J.P. Morgan Securities downgraded eBay
Inc (EBAY.O: Quotazione) while at least 7 other brokerages cut their price
targets on the stock Thursday, a day after the online auction
leader gave a disappointing fourth-quarter outlook.
 Shares of the company fell as much as 11 percent to 13.69,
their lowest in more than five years, but pared some losses and
were down $1.20 at $14.12 in midday trade on Nasdaq.
 "We believe eBay's biggest challenge is an inferior
technology platform, which is making it difficult for the
company to compete with other eCommerce platforms, such as
Amazon's (AMZN.O: Quotazione)," J.P. Morgan analyst Imran Khan said.
 Khan downgraded the stock to "neutral" from "overweight."
 The company's future growth will be inhibited, even after
the economy recovers, if it fails to improve user experience,
he wrote in a note to clients.
 The brokerage cut its earnings estimates for eBay for the
second time in a week said it expects the company's GAAP
earnings will be up only 3 percent next year.
 "We expect margins to contract, resulting in anemic
operating income growth," Khan said.
 Sanford C. Bernstein analyst Jeffrey Lindsay, who cut his
price target on the stock to $22 from $31, said the steady
gains in metrics such as number of active users were being
offset by declining sales rates and falling gross merchandise
 Analysts at Stifel Nicolaus, RBC and Jefferies & Co also
voiced their concerns on the same, saying decline in gross
merchandise volume demonstrated continued struggle.
 The company's gross merchandise volume (GMV) for the third
quarter decreased by 1 percent to $14.28 billion.
 "...The GMV weakness that appeared in the third quarter at
eBay and projected by management to reoccur in the fourth
quarter will continue into 2009," brokerage Soleil said. It cut
its price target on the stock to $16 from $25.
 EBay's fourth quarter is usually its strongest due to the
holiday sales but on Wednesday the company forecast adjusted
fourth-quarter earnings well below Wall Street estimates.
 Sanford analyst Lindsay said he expects a recessionary
environment to persist through much of 2009, both at home and
abroad, and anticipates eBay's 2009 revenue growth of only 3
percent and earnings of $1.72 per share.
 The analyst, however, said he remains positive on the
prospects of the company and the stock, and maintained his
"outperform" rating.
 The following is the list of price target changes:
 Brokerage                  Price Target
                        Current        Previous
 Sanford C. Bernstein   $22            $31
 Jefferies & Co         $22            $32
 RBC Capital Markets    $21            $25
 Barclays Capital       $15            $22
 UBS                    $17            $18
 Soleil                 $16            $25
 Stifel Nicolaus        $20            $22
 (Reporting by Aftab Ahmed in Bangalore; Editing by Gopakumar