Merrill Upgrades eBay

Analyst Justin Post says he sees less volatility in its earnings than the online auction retailer's eCommerce competitors

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.

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