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Why KeyBanc Is Bullish on eBay

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Apr. 19 2018, Updated 2:30 p.m. ET

eBay stock upgraded to “overweight”

Wall Street investment bank KeyBanc Capital Markets recently upgraded its rating on eBay (EBAY) stock to “overweight” from “sector-weight.” KeyBanc sees eBay stock closing the year at $50 per share. eBay stock is currently trading in the vicinity of $40.

In a research note cited by MarketWatch, analyst Ed Yruma of KeyBanc shared details on why the firm is bullish on eBay. One of the reasons Yruma sees a bright future for eBay is that the company’s management has done a great job in attracting shoppers. The analyst pointed out that 88% of listings on eBay are available for immediate purchase at a fixed price. Furthermore, 81% of eBay listings are brand-new items. In recent times, eBay has focused on improvements to become a modern e-commerce platform rather than merely an auction platform.

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eBay is expanding guaranteed delivery

eBay’s investment in an efficient delivery system has also made the company more competitive in the crowded e-commerce industry. According to analyst Yruma, eBay’s guaranteed delivery service is increasingly available, and more than 65% of items qualify for delivery in three days or less.

Retailers are investing in express delivery

Delivery speed is reshaping retail competition. It’s no wonder that traditional retailers like Walmart (WMT) and Target (TGT) and e-commerce providers like eBay, Amazon (AMZN), Alibaba (BABA), and JD.com (JD) are investing in express delivery systems. Amazon is able to deliver groceries from Whole Foods stores to customers within two hours at no extra cost. Alibaba and JD are using drones and other smart technologies like artificial intelligence (or AI) to speed up deliveries.

eBay is also using AI technology to improve product recommendation and search capabilities. Revenue increased 9.0% to $2.6 billion for eBay in 4Q17.

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