eBay Inc. Downgraded by Jefferies

Date: Investing.com
Analyst: Jefferies

Jefferies has downgraded eBay Inc (NASDAQ:EBAY) from "hold" to "underperform", citing several concerning factors:

• Slowing Advertising Revenue: eBay's advertising income is declining, impacting profitability.
• Increased Marketing Spending: Higher marketing expenditures are straining profit growth.
• China Slowdown Risks: The decrease in growth from China introduces further risk to eBay’s financial outlook.

Jefferies highlighted a significant drop in eBay's EBITDA, pointing out that its recent gains were mainly due to temporary factors like advertising growth and cost reductions.

> "We see decelerating advertising revenue combining with increased marketing investments leading to sluggish profit growth and downside risk to consensus estimates. The recent slowdown in China further diminishes growth prospects," stated Jefferies.

eBay’s previously strong advertising sector has slowed considerably, which is set to lower margins and limit reinvestment ability. The company's dependence on its Chinese market for growth in certain categories, such as auto parts and accessories, has become a weakness as this market’s growth decelerates.

As a result of these factors, Jefferies has reduced its price target for eBay from $60 to $52, anticipating below-average EBITDA growth compared to competitors.