Shareholders might have noticed that eBay Inc. (NASDAQ:EBAY) filed its quarterly result this time last week. The early response was not positive, with shares down 8.4% to US$49.28 in the past week. It looks like a credible result overall - although revenues of US$2.6b were what the analysts expected, eBay surprised by delivering a (statutory) profit of US$0.94 per share, an impressive 54% above what was forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on eBay after the latest results.
Following the recent earnings report, the consensus from 27 analysts covering eBay is for revenues of US$10.9b in 2021, implying a discernible 7.4% decline in sales compared to the last 12 months. Statutory earnings per share are expected to sink 11% to US$3.03 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$11.3b and earnings per share (EPS) of US$3.11 in 2021. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.
The analysts made no major changes to their price target of US$61.89, suggesting the downgrades are not expected to have a long-term impact on eBay's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic eBay analyst has a price target of US$82.00 per share, while the most pessimistic values it at US$49.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with the forecast 7.4% revenue decline a notable change from historical growth of 5.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 18% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - eBay is expected to lag the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for eBay. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for eBay going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with eBay .
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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