) to underweight from equal-weight.
Analyst Derek Brown says the third quarter modestly topped estimates, but offered further evidence of growing pains. He cited reductions in ongoing listings; gross margin sluggishness; decelerating/declining per-user, per-listing economics; and incremental infrastructure costs. Brown notes eBay currently trades at 2003 and 2004 p-e's 78 and 58, respectively, vs. the company's projected three-year growth rate of 25% to 35%.
Brown cut the $1.09 2004 earnings per share (pro forma) estimate to 99 cents, on revenue of $2.89 billion (down from the $2.93 billion estimate), and cut the $1.44 2005 estimate to $1.34, on revenue of $3.75 billion (from $3.91 billion).