EBay Stock Just Hit a Record. Why It Can Keep Rising.

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Ebay is repurchasing stock with profits from the sale of company units.

Getty Images/Sean Gallup

As the online marketplace company simplifies its structure and re-energizes its core with a larger focus on hot areas like certified secondhand watches and sneakers, Ebay stock has been on a tear, hitting a new high in intraday trading on Thursday. Following arrangements to sell its classified advertising unit and its StubHub ticketing arm, the company recently agreed to sell its operations in South Korea, resulting in a simpler and more focused business. Investors appear to be pleased: Since Barron’s profiled the company in a positive article in October, the stock has risen approximately 28%.

Thomas Champion of Piper Sandler reiterated his Overweight rating on eBay (ticker: EBAY) shares on Thursday, raising his price objective to $81 from $71. He is enthusiastic about the new organization. On Thursday, the stock reached a high of $70.76 before falling 1.2 percent to $69.31. In a research report, he added, “Ebay’s non-core divestiture process appears to be complete post transactions.” “The company should be a lot easier to run.” Champion stated that the profits from the transactions will be used to repurchase stock, stating that the company’s $4.7 billion in remaining buyback authorizations represent nearly 11% of the outstanding shares. According to Champion, eBay shares are “compelling on any profit metric.” According to the analyst’s calculations, the company’s enterprise value is just nine times estimated earnings before interest, taxes, depreciation, and amortization in 2022, compared to an average of 32 times for other online retailers. “Arguably, if the main marketplace is improving, this disconnect is too extreme,” he added. On a pro forma basis, compensating for the sale of the Korea company, he expects eBay to generate $10.47 billion in sales in 2021, up 18% from last year’s estimate of $8.9 billion. He forecasts $11.3 billion in 2022, an increase of 8%. Eric J. Savitz can be reached at eric.savitz@barrons.com./nRead More