eBay Inc (NASDAQ:EBAY) has finally bowed to activist pressure decided to spin off PayPal into a separate business. Investors reacted excitedly, pushing shares as much as 8% higher, and Carl Icahn issued a statement endorsing the online auction company’s announcement.

eBay Inc Downgraded, Icahn Praises PayPal Spinoff

eBay earns a downgrade

However, not everyone is overly thrilled with the news. Canaccord Genuity analysts have three reasons for downgrading eBay Inc in spite of the news about the PayPal spinoff.

In a report dated Sept. 30, 2014, analysts Michael Graham, Maria Ripps and Austin Moldow said they do think that eBay has made the right decision in spinning off PayPal. However, they downgraded the company’s stock from Buy to Hold, while maintaining their $57 per share price target on the company.

eBay Marketplaces may struggle

The Canaccord Genuity team believes that eBay’s Marketplaces business might struggle. The analysts cited their own checks and data from Channel Advisor for their reasoning for this view. They say the data points suggest that there will be a deceleration in gross merchandise volume growth in the third quarter. In addition, they think eBay’s operating environment is still “somewhat challenging.”

They also think that there will be very limited upside for eBay stock right now. They note that the positive reaction to the news about the PayPal spinoff pushed shares to around their price target of $57 per share. That price target is based on a sum of the parts analysis.

The analysts also said that one of the most important factors in determining how the separated eBay Marketplaces can be valued is how much management will be able to improve the company’s financial leverage and cut costs. They think it’s unlikely that management will reveal its plans for some time.

Carl Icahn issues statement on eBay

Activist investor Carl Icahn issued a statement about the PayPal spinoff on his website, Shareholders’ Square Table. He said he’s happy that eBay management and board “acted responsibly” about the separation with PayPal, taking a “better late than never” mentality.

Icahn added that he still believes the payments industry should be consolidated. He thinks that either PayPal should make some acquisitions or that PayPal should merge with another major payment services provider.

He suggests that this consolidation could be done through a reverse Morris Trust structure, noting that the introduction of Apple Inc. (NASDAQ:AAPL)’s Pay service brings another potentially strong competitor into the industry. Icahn also said the consolidations should happen as quickly as possible. The activist investor continues to be one of eBay’s biggest shareholders, and he said he will keep talking with eBay CEO John Donahoe.