Goldman Keeps Outperform on EBay

Analyst Anthony Noto sees stronger earnings through 2005 for the online auction giant

Goldman Sachs reiterated its outperform rating on eBay (EBAY ).

EBay posted 24 cents fourth-quarter earnings per share on a 57% revenue rise. Analyst Anthony Noto say the most notable parts of the fourth-quarter results are: the 335 basis-point operating margin expansion to 35.3%, the 41% incremental margins, and the 53% year-over-year gross merchandise sales growth to $7.1 billion.

He notes eBay continues to drive superior growth and profitability with improving returns due to its expansion into new geographic markets, product categories, and pricing formats within a high-margin business model. He upped 2004's $2.95 billion revenue estimate to $3.04 billion, and upped the $1.05 earnings per share estimate to $1.06. He also raised 2005's $3.8 billion revenue estimate to $4.07 billion and upped the $1.50 earnings per share estimate to $1.53.

Noto sees an aggressive potential scenario for 2005 earnings per share of $1.65. He upped the implied value range to $68 to $74.

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