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Raymond James Downgrades eBay, but Still Expects Upside

In a research note on Thursday, Raymond James downgraded eBay’sstock but still expects the company’s shares to climb higher.

eBay headquarters in San Jose, California.
Photo: Coolcaesar
eBay headquarters in San Jose, California.

Analysts lowered their rating for eBay to “outperform” from “strong buy” with a $39 price target. Its stock fell 0.3 percent in trading to close at $35.62 on Thursday.

“While we remain optimistic on PayPal’s positioning in the POS (point-of-sale) payments market and its opportunity for share gains, we believe the mobile POS market remains early in its adoption and don’t expect meaningful revenue from these initiatives in the near term,” the report said.

A strong buy from Raymond James means that analysts expect eBay to appreciate, produce a total return of at least 15 percent and outperform the S&P 500 during the next six to 12 months. Analysts expect stocks rated outperform to appreciate and outperform the S&P 500 over the next 12 to 18 months.

PayPal is a unit of eBay. Analysts said they are positive on PayPal’s new digital wallet, PayPal Here service, the program’s recent roll out in Home Depot and the appointment of David Marcus as the payment system’s new president on March 29.

Marcus told CNBC that increasing mobile payments is a priority for PayPal. Mobile payments have grown significantly in volume from $150 million to more than $7 billion this year, he added.

Analysts said point of sale is a bigger opportunity than a threat for eBay because of the sizeable offline market. It added that PayPal is well positioned due to its more than 100 million active accounts.

Additional News: PayPal Names New President

Additional Views: Mobile Payments Industry: Analyst

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CNBC Data Pages:

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Disclosures:

The covering analyst and/or research associate owns shares of Home Depot stock.

Disclaimer

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Follow Katie Little on Twitter @katie_little.