Yahoo Finance eBay Inc. Just Recorded A 18% EPS Beat: Here's What Analysts Are Forecasting Next
eBay Inc. (NASDAQ:EBAY) defied analyst predictions to release its quarterly results, which were ahead of market expectations. eBay beat earnings, with revenues hitting US$2.4b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 18%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Check out our latest analysis for eBay
After the latest results, the consensus from eBay's 29 analysts is for revenues of US$9.70b in 2020, which would reflect a definite 9.8% decline in sales compared to the last year of performance. Statutory earnings per share are predicted to rise 5.7% to US$2.29. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$9.53b and earnings per share (EPS) of US$2.14 in 2020. So the consensus seems to have become somewhat more optimistic on eBay's earnings potential following these results.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 5.2% to US$41.02. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on eBay, with the most bullish analyst valuing it at US$52.00 and the most bearish at US$24.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 9.8%, a significant reduction from annual growth of 6.7% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 16% next year. It's pretty clear that eBay's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards eBay following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that eBay's revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for eBay going out to 2024, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 3 warning signs for eBay that you should be aware of.
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