Online auction site eBay (NASDAQ:EBAY) is likely to exceed expectations when it reports quarterly results on Wednesday, according to RBC Capital Markets.
“Based on intra-quarter data points, our channel checks, and our model sensitivity work, we believe Street estimates for the December quarter are reasonably conservative,” said RBC's Mark Mahaney and Jim Shaughnessy.
US multi-platform unique visitor growth on eBay sites in the fourth quarter rose 14% year-on-year, representing an acceleration on the 10% growth seen in the preceding quarter.
Multi-platform traffic to the eBay.com site was up 11%, compared to an 8% rise in the third quarter.
The broker notes that, according to comScore’s eCommerce Brief, Total US Online Desktop Spending (excluding-travel) grew by around 11% year-on-year in October/November combined, representing a slight acceleration in the growth rate seen in the first nine months of the year.
RBC is predicting revenue of US$2.2bn and 49 cents (pro forma) earnings per share (EPS), versus consensus forecasts of US$2.32bn and 50 cents, respectively.
In addition to the profit & loss figures, RBS believes the key factors to watch out for will be gross merchandise value (GMV) trends – it predicts GMV of US$22bn worldwide – and commentary on the company's share buy-back scheme. The board is authorized to splash out US$3bn on its share repurchase program and so far has only spent US$600mln of that.
RBC has a price target of US$30 for eBay, versus a current price of US$26.14 for the online auction pioneer. Its rating is “sector perform”.
“While we agree the company is unique given its deep pool of sellers (25MM) and listed products (800M), we think eBay will continue to face increasingly powerful competitive headwinds (mostly Amazon),” RBC concluded.