eBay Inc (NASDAQ:EBAY) announced last week that it plans to spin off PayPal into a separate, publicly traded company, and analyst viewpoints continue to pour in. BGC analysts see two big positives and three big negatives from a separation of the two companies.

eBay Inc Price Target Upped Before Earnings

eBay earnings on Oct. 15

News of eBay’s plans to spin off PayPal has largely eclipsed the company’s earnings report, which BGC analysts say is expected on Oct.15. In a report dated Oct. 2, 2014, analyst Colin Gillis said he bumped up his price target for eBay from $59 to $63 per share ahead of next week’s earnings report and in light of the company’s spinoff plans.

He maintained his Buy rating on eBay and said he’s estimating $4.4 billion in revenue, which would be a year over year growth rate of 12.5% and a sequential growth rate of .3%. His revenue estimate is in light with the consensus estimate.

Expectations for eBay’s earnings report

The analyst projects earnings of 67 cents per share for eBay’s September quarter. That’s compared to last year’s 64 cents per share and last quarter’s 69 cents per share. His estimate is also in line with the consensus estimate for earnings per share.

eBay previously guided for revenue of between $4.3 billion and $4.4 billion and earnings pf between 65 cents and 67 cents per share for the quarter.

PayPal spinoff: the good

Gillis said he sees two positives and three negatives in eBay’s planned spinoff of PayPal. On the plus side, he said eBay currently isn’t likely to pursue big acquisitions. He notes that investors previously have been concerned about management making “a misguided large acquisition,” thus requiring the company to repatriate overseas cash.

Another positive he sees is that both eBay and PayPal could become attractive acquisition targets. However, he doesn’t think an acquisition of either company should be at the center of any investment thesis.

The bad of a PayPal spinoff

On the negative side, he said that eBay’s Marketplaces business will probably see headwinds because of the recent changes in search algorithms. You may remember that algorithm changes have caused problems for eBay Marketplaces in the past. The analyst added that both businesses will probably see headwinds as the U.S. dollar strengthens.

Gillis also said that eBay’s September quarter could be “lackluster” because of management’s sudden change of heart on the PayPal spinoff idea. He doesn’t think eBay will miss guidance, but he also doesn’t see any potential for upside or for the company to increase its full year guidance.

What is PayPal worth?

The BGC analyst also provided an estimate of what PayPal may be worth. He estimates a standalone value of around $40 billion or potentially more. That’s based on his estimated revenue for PayPal in 2016, which is $12 billion. He’s estimating $3 billion in EBIT with a 25% margin for the same year.

With his current price target of $63 per share, that reflects a $78 billion market capitalization and values eBay Marketplaces at $38 billion.