EBay: The Stock Could Be Worth $35 a Share, Piper Says
A year from now, eBay (EBAY) shares could be worth as much as $35 a share, Piper Jaffray analyst Gene Munster asserts in a research note this morning.
Munster thinks the Street undervalues the company’s return to earnings growth in 2010–and says a sum-of-the parts approach reached a $35 valuation. Here’s how he gets there:
- The core Marketplace business, he contends, is worth 10x 2011 estimated EBITDA, or $24 a share. The a group of e-commerce stocks trades at 12x 2010 and 10x 2011, he notes. While eBay’s Marketplace business has lower growth prospects than the group overall, he contends that factor is offset by the company’s franchise status and ~30 percent free cash flow profile.
