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Robertson Stephens downgraded its investment rating on shares of eBay Inc. (EBAY
) to buy from strong buy.
Analyst Lauren Levitan says the downgrade is based on valuation and the belief that eBay's acceleration in investments in business, particularly in marketing the brand, could limit significant near-term operating margin expansion, and thus positive revisions in earnings per share forecasts. However, Levitan says, given eBay's solid business model, compelling growth initiatives, and enormous cash flow generation capabilities, she continues to believe it has meaningful long-term growth opportunities, and that the stock should remain a core holding in the e-commerce sector.
The analyst sees cash EPS for eBay of $0.49 in 2001, rising to $0.77 in 2002. She raised her $70 price target to $75.