-- eBay's (EBAY) implied deceleration in gross merchandise value growth in the second half has driven investor concerns, but Morgan Stanley said in a Thursday note that the market is underappreciating clear levers for continued outperformance, viewing any weakness as a buying opportunity.
The company posted 14% foreign exchange-neutral gross merchandise value growth in Q1, beating the high end of guidance. However, implied second-half guidance suggests a sharp deceleration to around 3% growth, compared with roughly 12% in the first half, according to the note.
Morgan Stanley said this disconnect is the key debate and it expects the company to outperform in the second half driven by broad-based momentum across segments, emerging growth vectors such as eBay Live and Vehicles, a consistent history of conservative guidance and upside from artificial intelligence-driven tools.
The investment firm said it is increasingly confident that the company can deliver mid-single-digit gross merchandise value growth in the second half, which would likely drive further estimate revisions and support valuation upside as growth durability becomes clearer.
Morgan Stanley reiterated its overweight rating on the stock and raised its price target to $121 from $117.
Shares of eBay were down 2.7% in Thursday trading.
Price: $101.02, Change: $-2.77, Percent Change: -2.67%