eBay (NASDAQ:EBAY) shares gained more than 3% pre-market today after Morgan Stanley analysts upgraded to Overweight from Underweight, substantially raising the price target to $62 from $35. The analysts highlighted eBay’s adoption of site-wide horizontal solutions and generative AI innovations as key factors that are expected to drive a balance of slight Gross Merchandise Volume (GMV) and adjusted EBIT growth, projecting a +1%/+5% CAGR from 2023 to 2026.
The analysts suggest that returning to positive FXN GMV growth amid a tight macroeconomic environment could strengthen investor confidence in eBay’s medium-term growth prospects, potentially occurring sooner than anticipated in the first half of 2024. Despite eBay and Etsy having similar growth profiles, eBay currently trades at a roughly 35% discount to Etsy on 2025 EV/EBITDA. The analysts argue this provides a strong basis for potential multiple expansion should eBay execute effectively. The new $62 price target reflects an estimated 8.8x 2025 EV/EBITDA, prompting the upgrade from Underweight to Overweight.