Merrill upgrades eBay (EBAY) to buy from neutral.
Analyst Justin Post says eBay is now more an attractive valuation with a 23% upside to $96 target. He sees less potential volatility from eCommerce earnings per share reports (Amazon, Shopping.com, and Overstock), and less potential selling pressure from momentum investors.
By fourth-quarter 2005 Post sees early visibility on returns from incremental PayPal investment, more effective advertising, opportunity for near-term year-over-year margin improvement, and easier revenue growth comps.
He prefers eBay to Amazon.com due to a stronger competitive moat, vs. offline commerce, faster revenue growth, and better near-term visibility on returns from investment spending.