eBay Revenue Estimates Raised

eBay shares were getting a boost in early trading today after Goldman Sachs raised its third quarter estimates for both revenues
and earnings at the online auction giant.


GS raises its estimate of revenues to $193 million from $187 million, and
earnings to 11 cents a share from 10 cents. The market responded, with shares
of eBay opening at $58.06 after closing yesterday at
$56.91. The stock was at $57.40 in mid-morning trading.


Goldman said its estimates are based on a study of more than 1,000 closed
auctions, looking at conversion rates, average length of auction, ASP, and
percentage take as well as increased traction of eBay’s fixed price platform,
including Half.com and eBay’s new storefronts.


“eBay trades at … a premium reflecting eBay’s visibility of earnings,
accelerating fundamentals and clear leadership position,” GS said in an
advisory to clients. Still, there are some doubters out there; other recent
studies have found that some goods can be purchased cheaper elsewhere.


GS said its study, however, found that “key domestic metrics (which drive our
revenue estimate) remain stable from last quarter with percent take at 7.6
percent, auction velocity of 6.2 days, conversion rate of 50 percent or more,
and an ASP of $40. We estimate listings for the third quarter to date are
approximately 57.8 million, up 65 percent year over year, on track to exceed
our total hosted auctions estimate of 105 million for the quarter, which
represents a 53 percent year over year gain.”


“We continue to believe that eBay is a core Internet holding with a US
Recommended List rating,” GS said. The consensus of analysts reporting to
First Call is third quarter earings of 9 cents a share and 20 of 23 analysts
rate eBay a buy or a strong buy.


But not everyone is so bullish. a recent article on TheStreet.com reports that “recent studies of prices, listings and users
cast a cloud” over the company and that some items, especially electronics
products, can be purchased for less elsewhere. And mainstay category
collectibles is seeing falling prices, the article said.


Goldman’s conclusion, however, reads like this: “While we recognize that the
stock remains expensive, we are hard-pressed to find other technology stocks
that have accelerating fundamentals, strong top and bottom-line visibility, a
clear leadership position, and global expansion potential requiring little
capital in the deteriorating economic environment.”

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