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.