Shares of eBay Inc. rose Thursday with one analyst upgrading the stock, citing strong profits from eBay's PayPal division and signs that its online shopping business is improving.
eBay's sales stabilized in July, compared with a year ago, Citigroup analyst Mark Mahaney said in a research note. The analyst said two of the largest eBay sellers indicated "at least modest improvement in sales" in July and early August, and traffic to eBay's site slid less year-over-year than in recent months.
With its large online marketplace and other Web-based businesses, eBay can be a good gauge for how Web businesses are faring, particularly online retail. But while its online payments business has boomed, eBay's ecommerce operations have not. The company has tried to improve ebay.com and says its efforts should pay off in the next six to 18 months.
Mahaney upgraded eBay to "Buy" from "Hold" and wrote that weakness in eBay's marketplaces division, which includes ebay.com and other ecommerce sites, is already priced into the stock.
"We remain skeptical of the ability of eBay Marketplace to grow in-line with overall ecommerce growth rates," Mahaney said. "But we believe our skepticism is now widely shared."
Mahaney also wrote that eBay's PayPal system could grow its profit 20 percent to 30 percent over the long-term.
eBay's stock gained 38 cents, or 1.8 percent, to $21.63 in afternoon trading.
© Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.