Analysts Trash EBAY Stock After Weak Holiday Forecast

More than a dozen analysts have already issued price-target cuts

by Lillian Currens

Published on Oct 24, 2019 at 10:09 AM
Updated on Jun 24, 2020 at 10:16 AM

The shares of eBay Inc (NASDAQ:EBAY) are eyeing four-month lows today, following a sub-par earnings report. While its reported earnings per share of 67 cents and $2.65 billion in revenue beat analyst estimates, the e-tailer predicted weaker-than-expected revenue for the holiday quarter.

The forecast has analysts swarming the stock. So far, more than a dozen in coverage have slashed their target prices, with Mizuho cutting its estimate all the way to $33 from $36. Plus, Raymond James came in with a downgrade to "market perform" from "outperform," and RBC noted that it sees negative trends for the company's fundamentals.

Should this negative price action continue, even more downgrades could be on the horizon. Prior to today, 10 of the 26 in coverage called EBAY a "buy" or better, with not a single "sell" to be seen. Plus, the consensus 12-month target price of $40.98 is at a solid 14.3% premium to current levels. 

On the charts, EBAY has sliced straight through recent support at its 180- and 200-day moving averages, down 8% at $36, and is pacing for its biggest one-day drop in over a year. Prior to today, the equity was attempting to rebound off its early October four-month lows, but ran up against pressure at its 40-day moving average. Despite this massive drop, the stock is still floating north of its year-to-date breakeven, with a nearly 25% gain. 

Options bears are likely cheering today's tumble. We just covered these traders' penchant penchant for put buying, with 1.57 puts bought for every call on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) during the last 10 days -- a ratio that sits higher than 90% of all other readings from this past year.


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