Last Friday, eBay closed at $36.12, marking a 1.4% gain for the week. The auction giant will be reporting its first quarter earnings this coming Wednesday (18 April). Over the past month, eBay has traded around $35.41 - $38.08. The stock is currently up 19% for the year.
Analysts are expecting eBay to report earnings of 43 cents per share, up 7.5% from 40 cents per share a year ago. Earnings for the fiscal year are expected to reach $1.97 per share. Revenue is projected to be $3.15 billion for the year, while annual revenue is expected to be around $13.84 billion. Recent monthly sales data also portend that eBay's core marketplace segment is on track to deliver stronger revenue, having built on gains achieved over the past year after the company has revamped the business model with some fee changes and other tweaks.
eBay is entering this earnings announcement with substantial revenue momentum. The company has generally performed well in the previous four years, with double-digit revenue increases reported. In the previous quarter, revenue rose by 35.5% year-on-year. The PayPal unit is also believed to continue to fuel earnings growth at the company, although it is still unclear if recent high-level departures from the unit could constitute a brain drain problem.
Given the above, most analysts are optimistic about both the company's short-term and long-term prospects. After all, the company has been reporting phenomenal profits for the past two financial years. Shawn Milne of Janney Capital Markets wrote, "We continue to believe that eBay is gaining traction in its U.S. marketplace turnaround efforts.", while giving it a "buy" rating and $43 price target. ThinkEquity analysts also set a "buy" rating and a $43 price target on the stock. In addition, analysts at Morgan Stanley raised their price target for eBay to $43, while upgrading it to "overweight".