Jefferies cuts eBay target to $75 citing EBITDA risks

Jefferies reiterated an Underperform rating on eBay Inc and cut its price target to $75 from $80. The broker cited pressure on underlying earnings and decelerating advertising growth as key reasons for the downgrade.

The brokerage firm lowered its 2027 and 2028 EBITDA estimates to 4% and 11% below consensus, respectively. Jefferies noted that consensus models anticipate 12% growth in underlying EBITDA in 2027, following declines of roughly 20% in 2024, 15% in 2025, and 5% in 2026. According to Jefferies, eBay's underlying EBITDA has contracted by about 13% annually since 2023, after falling roughly 12% per year from 2019 to 2024.

While reported EBITDA grew by 4%, 4%, and 11% over the past three years, Jefferies stated that headcount reductions and ad revenue masked core operational weakness. Advertising revenue surged 60% since 2023 at an estimated 80% margin, accounting for more than 100% of eBay's total EBITDA growth in that span. However, the broker expects advertising expansion to slow in early 2027 once eBay laps attribution adjustments introduced in the United States and Canada in January 2026.

Jefferies also highlighted roughly 600 basis points of pressure on eBay's underlying gross margin. In addition, the broker flagged an increasing shift toward lower-margin offerings, including the authentication guarantee, offsite ads, managed and international shipping, the Facebook Marketplace partnership, eBay Live, eBay Vehicles, and the Depop acquisition. Jefferies warned that upcoming third-quarter results could serve as a negative catalyst, noting that the $75 target represents a 16-times multiple on 2027 estimated GAAP earnings, about 15% below the internet sector average.