eBay (Nasdaq:EBAY) Under Valuation, Earnings Pressure

Over the next couple years eBay (Nasdaq:EBAY) will struggle to retain market share, according to Piper Jaffray’s Gene Munster.

Canaccord commented saying, "Despite a major Black Friday boost in online shopping, shares of Internet retail giant eBay fell on Tuesday after analysts at Piper Jaffray and Stifel Nicolaus downgraded the company amid earnings and valuation concerns. Specifically, Piper Jaffray’s Gene Munster harbours worries over the tech darling’s rate of innovation, writing, “While we are positive on eBay's leadership in mobile and think PayPal is a great business, we don't believe the pace of innovation from marketplace is fast enough to stall market share losses any time in the next 2 years, which could hamper earnings growth for the overall company despite 30% annual profit growth from Payments.” Likewise, Jordan Rohan of Stifel Nicolaus downgraded eBay, mostly because of a lack of upward earnings momentum. Margins at eBay’s online payment service Paypal, “while stable, could reduce total company margins over the next two years, as Paypal approaches half of total revenues.” According to eBay, online broker PayPal enjoyed payment growth of 27% on Black Friday, up from 20% a year ago. Highlighting the growing popularity of smartphones and other mobile devices, eBay noted that PayPal mobile payments grew a massive 310% compared to the prior year. Rohan warns nonetheless that eBay investors should not get carried away with the impact of the holiday season. "Our take on holiday e-commerce is that trends have been healthy, but not beyond expectations.”

eBay closed Wednesday at $29.26, rising by $0.12, or 0.41 percent.