eBay Showered With Bull Notes After Blowout Earnings

eBay reported earnings and revenue beats, and upped its full-year guidance

Managing Editor
Apr 24, 2019 at 9:59 AM
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One of today's big earnings winners is eBay Inc (NASDAQ:EBAY), after the online retailer's first-quarter adjusted profit came in at 67 cents per share, topping the consensus estimate of 63 cents per share.The company's quarterly revenue of $2.6 billion came in above expectations, and eBay also upped its full-year profit and revenue outlook, thanks to an increase in active buyers. 

The blowout report has sparked a flurry of analyst attention. No fewer than 14 brokerages have issued price-target hikes, the highest coming from BMO to $46 from $45. Despite the bull notes, many analysts expressed concern over eBay's decreasing gross merchandise volume (GMV).

Overall, analyst sentiment remains skewed toward the skeptical side. Of the 25 brokerages covering EBAY, 14 rate it a tepid "hold." Plus, the consensus 12-month price target of $39.08 is now just above its current perch.

This pessimism goes beyond the analyst community, which could fuel more upside on a potential unwind. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), EBAY's 10-day put/call volume ratio of 1.70 ranks in the 94th annual percentile, meaning puts have been bought to open over calls at a quicker-than-usual clip.

Echoing this, near-term options traders are very put-skewed on the security, based on its Schaeffer's put/call open interest ratio (SOIR) of 1.29. This ranks in the 100th annual percentile, showing such a bearish tilt from short-term speculators is rare.

At last check, eBay stock is up 4.1% to trade at $38.18, filling an April 11 bear gap, and reclaiming its 40-day moving average. Since a Dec. 26 bottom near $26, EBAY has now added 46%, aided in part by a late-January bull gap after activist investors Elliott Management and Starboard Management unveiled stakes in the company.


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