Deutsche Bank cuts EBay (EBAY) to hold from buy.
Analyst Jeetil Patel says his downgrade is based largely on lower operating margin in 2005. He cites lower operating margin, higher marketing expenses, slowing growth, a flattening/decline in year-over-year metric comparables, and issues plaguing the Street.
He says while the fourth quarter is in line with estimates, he highlights that U.S. transaction business slowed to 24% year-over-year, vs. 30% growth in previous quarters, and 20% growth expected in 2005.
Patel cuts his $110 target to $80, based on 20 times his $2.00 2006 earnings per share estimate. He thinks the stock will likely trade sideways, pending recovery in operating margins and improved growth prospects.