eBay (NASDAQ:
EBAY) is getting two upgrades this morning:
- Piper Jaffray is raising EBAY to Overweight from Underweight while raising their target to $30 (prev. $19).
According to Piper the upgrade is based on their quarterly eCommerce survey which suggests recent changes made to the eBay marketplace could have a longer term impact on stabilizing the business. Also, web traffic data suggests slight upside to the September quarter.
Firm's proprietary quarterly eCommerce survey of 300 online shoppers shows 79% were 'satisfied' or 'very satisfied' with eBay, up from 70% the previous two surveys.
Web Traffic Improving. Data from compete.com shows unique users to eBay's U.S. site increased 12% y/y in August, up from ~5% y/y the prior 3 months. Piper is modeling for marketplace revenue to be down 8% y/y in Sept. Given GMV is the critical part of the equation, unique users are only a directional indicator toeBay's marketplace revenue.
Despite recent upgrades, Street is still largely neutral on shares.
Piper Jaffray Quarterly eCommerce Survey Shows Improved Satisfaction. Their proprietary quarterly eCommerce survey of 300 online shoppers shows 79% were 'satisfied' or 'very satisfied' with eBay, up from 70% in our June 2009 and March 2009 surveys, and 73% in our September 2008 survey. Firm believes customer satisfaction is a leading indicator of future sales because it leads to repeat sales, lower marketing spend, and better margins.
Web Traffic Improving, Suggest 1% Revenue Upside To September. Unique users to eBay's U.S. site are showing consistent signs of improvement suggesting upside to marketplace in the September quarter. Unique users in August increased 12% y/y in August, up from 8% y/y in May, 4% y/y in June and 3% y/y in July, according to compete.com.
Price Target. New price target of $30 (from $19) is based on a sum-of-the-parts valuation using 10x EBITDA for the marketplace business, 12x EBITDA for the Payments business, and a $2.75 billion valuation for Skype, in line with what eBay has an agreement to sell Skype for.
