|By PR Newswire||
|April 14, 2014 09:30 AM EDT||
CHICAGO, April 14, 2014 /PRNewswire/ -- Zacks Equity Research highlights BitAuto Holdings (NYSE:BITA-Free Report) as the Bull of the Day and Sotheby's (NYSE:BID-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis oneBay Inc. (Nasdaq:EBAY-Free Report), Amazon.com Inc. (Nasdaq:AMZN-Free Report) and Netflix Inc. (Nasdaq:NFLX-Free Report).
Here is a synopsis of all five stocks:
BitAuto provides Internet content and marketing services for the automotive industry in China. Its BitAuto.com and Ucar.cn websites provide consumers new and used automobile pricing information, specifications, reviews and consumer feedback.
I last wrote about BitAuto as the Bull of the Day in late November when it was trading just below $35. In the subsequent four months, it built a base at $27 and reached an all-time high above $46 in early March. I thought it was a good time to revisit the name as it just became a Zacks #1 Rank again on a big boost in the earnings outlook.
Since China overtook the US as the world's largest automobile market in 2010, Chinese companies have of course been scrambling to capitalize on the boom. While you may have never heard of BitAuto and you may be skeptical about "another Chinese Internet company," their roots in the auto industry go back more than a decade.
BitAuto was originally an advertising agency focusing on the automobile sector before they expanded into an integrated online vertical/portal model. They operate their websites as vehicles for dealers, automotive advertisers and consumers to converge.
Sotheby's (NYSE:BID-Free Report), the eponymous luxury auction house, became a Zacks #5 Rank (Strong Sell) on March 4 when the stock was trading around $47.50. After a consistent string of earnings misses, including a whopping 175% miss one year ago (-$0.33 reported vs. expectations of -$0.12), estimates continue to get pushed lower.
In the past 60 days, full year 2014 consensus EPS projections have fallen from $2.51 to $2.37. That still represents 33% growth over last year (not a high hurdle after so many misses), but investors have not been impressed. The stock has dropped over 15% since it became a Zacks #5 Rank.
But it's possible that two other market forces are impacting the stock price besides downgrades in the company's earnings outlook: a bear theme about BID and an activist who's getting in his own way.
eBay, Icahn Cold War Ends
Reportedly, Icahn, who owns 2.15% of eBay, withdrew his campaign to add two of his employees — Daniel Ninivaggi and Jonathan Christodoro — to the eBay Board and divest the PayPal unit. However, eBay will appoint David Dorman, a founding partner of investment firm Centerview Capital Technology, as an independent director to the board at Icahn's suggestion.
However, Icahn still believes that the PayPal spin-off will generate the maximum value for shareholders, but will put his say through private discussions. Although CEO John Donahoe has not made any commitments regarding the separation of its PayPal unit, he has agreed to hold regular discussions with Icahn regarding strategic alternatives.
The dispute between eBay and Icahn started in Jan 2014 after Icahn proposed to spin off PayPal under a different management which would boost both the companies. Also, Icahn accused two eBay board members of investing in companies that are direct competitors to eBay.
The digital payment arm, PayPal, was acquired by eBay in 2002 for $1.5 billion. Since then, it has become the giant marketplace's major growth driver and the actual reason for investors to hold eBay shares. With increasing preference for online shopping nowadays, the use of this online payment service has also risen. Thus, PayPal accounts for a large percentage of eBay's total revenue.
Additionally, PayPal along with fulfillment services, enables eBay to provide a complete solution to retailers, whether brick-and-mortar or online. The unit thus drives eBay's share value.
This makes eBay an ally of traditional retailers instead of a competitor, further strengthening its position versus Amazon.com Inc. (Nasdaq:AMZN-Free Report), and improving its chances of picking up market share.
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