To: John Pitera who wrote (2472 ) 10/20/2001 10:04:37 PM From: John Pitera Read Replies (2) | Respond to EBAY--the Bloom coming off of the rose.... be sure to read the post I am responding to.beginning of the end for the lone Internet stock over $50? We would not go that far, but we do expect we'll see more downgrades over the coming months similar to this morning's USB Piper Jaffray downgrade to Neutral from Buy with a lowered price target of $53 from $80. The company is feeling some economic impact and is cautious on the outlook for the first time . While eBay did increase its previous guidance slightly last night, the company was cautious on Q4 based on lowered demand from consumers , as buyers have been slower to return than sellers. The stock is down so sharply because the previous belief that eBay was immune (some even argued helped by) from the weakening economy is no longer valid. While growth rates remain unchanged for Q4, growth is now off of a smaller base making the company's famous prediction for $3 bln in 2005 revenues more difficult. The relatively tempered tone of the call, versus prior calls, may give pause to some jittery eBay holders, uncomfortable holding eBay at such high multiples . There are some important factors in eBay's favor including a large market opportunity (especially overseas growth) and the potential for margin expansion down the road. However, the bears make a strong argument on valuation . eBay trades at a forward p/e over 70x. which makes us question how much upside is left in the stock. eBay has an analyst meeting on Oct 29 whih could act as a near term catalyst, but we recommend selling into any strength as the potential for future downgrades exists. -- Robert J. Reid, Briefing.com-------
