Raymond James & Associates published a research report on eBay Inc (NASDAQ:EBAY) on Wednesday, July 16th. The report focused on eBay’s second quarter earnings report issued earlier this week and the company’s performance so far in 2014.

ebay

RJ analysts Aaron Kessler and Ben Cohen highlight that eBay had a mixed second quarter with continued strength in PayPal but weaker Marketplace growth. The lagging Marketplace growth was pretty much anticipated given the cyber-attack suffered by the form as well as Google SEO changes in the second half of the quarter. The company mentioned these events will also have some impact on second half 2014 results and eBay Inc (NASDAQ:EBAY) lowered the high end of revenue guidance, while maintaining EPS guidance.

In the overview of the report, Kessler and Cohen say: “We maintain our Outperform rating and $62 price target given: 1) eBay’s leadership position in Marketplaces and Payments; and, 2) we believe valuation is attractive at ~15.5x our 2015 E non-GAAP EPS.”

Ebay actauls vs estimates

Positives for eBay in 2Q

The Raymond James report notes that in 2Q, eBay Inc (NASDAQ:EBAY)’s payments TPV was strong at 26% y/y forex neutral, and was driven by an improvement in merchant services TPV to 33% y/y. The report also highlights that the Payments Segment Margin increased 150 bp y/y to 24.5% largely due to a higher transaction margin and operating leverage. The Fixed Price Marketplaces GMV also kept up strong growth at 19% y/y vs. 20% y/y in the first quarter.

Negatives for eBay in 2Q

Kessler and Cohen also pointed out some negatives for eBay Inc (NASDAQ:EBAY) in its second quarter report. First, GMV growth declined to just 8% y/y forex neutral compared to 11% y/y last quarter as eBay was hamstrung by the cyber-attack as well as the change in the Google SEO algorithm. The company said June GMV growth dropped off to 7%, but also noted some recovery in the first part of July. Second, Non-GAAP operating margin declined 190 bp y/y to 24.4%, mainly because of more advertising to offset the above revenue challenges. Third, the firm reduced revenue guidance by $200 million because of the impact of the cyber-attack and SEO change ups.

Guidance and estimates

ebay estimate changes

The RJ analysts point out that eBay guided 2014 net revenues to $18-18.3 billion compared to a prior guidance of $18-$18.5 billion, reducing the top end of guidance by $200 million. Non-GAAP EPS guidance was unchanged at $2.95-3.00 due to better PayPal operating leverage and fewer shares outstanding.

In terms of 2014/2015 estimates, Kessler and Cohen reduce their revenue projections by 0.4%/0.7% while our 2014/2015 non-GAAP EPS estiamte slips from $2.98/3.29 to $2.96/3.27.