ebay
Q2 Estimates & Target
Here are my estimates for eBay’s Q2:
Q2 Revenue: $2.30 Bil
Q2 EPS: $0.39
Income Statement | |
Three months ended June 30, 2010 | |
Revenue | $2,304,524 |
Cost of Revenue | $532,086 |
Gross Margin | $1,772,439 |
Operating Expenses: | |
R&D | $204,357 |
S&M | $501,954 |
G&A | $297,544 |
Provision for Loan Loss | $108,313 |
Amortization | $65,215 |
Restructuring | $1,278 |
Total | $1,178,660 |
Income from Operations | $593,779 |
Interest Income | $16,962 |
Income before Taxes | $610,741 |
Provision for Income Taxes | -$105,268 |
Net Income | $505,473 |
EPS | $0.39 |
Current Street consensus has second-quarter revenue and EPS at $2.20 Bil and $0.40, respectively. Once again, my quarterly predictions are mixed, with revenue of $2.30 Bil above The Street’s consensus, while EPS of $0.39 is below.
Price Target!
1 Year Target = $23.11
The average price 1-year price target on eBay’s stock is currently $28.30—my estimate is $5 lower. In reaching the target of $23.11, I first needed to find the stock’s multiple. I took the current trading price of $26.40 and divided it by the sum of the last three quarterly EPS numbers and my current Q1 estimate of $0.39. This gave me a Price-to-Earnings ratio of 13.68. The next step involved estimating all four quarterly EPS figures for 2010 (Q1-Q4) to arrive at total forward-year earnings of $1.69/share, or $0.02 above analysts' estimates. Multiplying the P/E of 13.68 by the 2010 earnings estimate of $1.69/share yields the price target of $23.11.
Recommended Position
As a result of the following two factors, I am initiating a HOLD rating on eBay’s stock:
1) Management’s inability to rein in costs and
2) Uncertainty over the synergistic potential of recently acquired business units.
Tomorrow afternoon I’ll be posting a recap of eBay’s earnings report, comparing actual earnings to mine and The Street’s estimates.
If you like what you’ve read, be sure to leave me a comment!
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eBay Ownership
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Disclaimer:
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.
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