Citigroup (NYSE: C) reiterated its “hold” rating and $28.00 price target for popular online-auction company eBay (NASDAQ: EBAY), but said that despite the company’s 15% year-to-date rally, the stock still trades at a discount relative to other large-cap online-retailer stocks, with a price to earnings ratio roughly half of that of Amazon.com’s (NASDAQ: AMZN).
The firm said that the future of eBay’s online payments service, PayPal, has a very robust outlook for the future, but that its online auction service is a very uncertain future.
The analyst wrote, “Applying a 10x P/E to the Marketplaces Segment and a 20x P/E to the Payments Segment yields a $28 target price. A Bullish Upside SOP Valuation applying 15X P/E on the 2011 Marketplace Segment and a 25X P/E on the 2011 Payments Segment would generate a $36 PT.”
