EBay shares fall on auction weakness

SAN FRANCISCO (Reuters) - EBay Inc shares fell 4 percent on Thursday following stronger quarterly results that were belied by continued weakness in the company's core U.S. auctions business, analysts said.

Analysts said the results painted a mixed picture of the Internet auction leader, with some using the quarterly report to justify higher price targets on the stock, while one broker downgraded the stock to "neutral" after recent price gains.

The shares fell 4.3 percent, or $1.39, to $30.73 in Nasdaq trading. In the month prior to the quarterly report released on Wednesday, the stock had jumped 25 percent.

American Technology analyst Tim Boyd cut his rating on the stock to "neutral," saying the company had failed to deliver a hoped for reacceleration in U.S. gross merchandise volume -- an overall measure of goods and services sold via eBay auctions.

"We see limited upside to the shares from current levels and are therefore moving to the sidelines," Boyd said in a research note.

The growth rate for gross merchandise volume was flat compared to the fourth quarter and up 12 percent from the year-ago quarter, down from levels around 20 percent or higher prior to 2007.

Citi analyst Mark Mahaney said internally generated growth in its U.S. marketplaces business was around a modest 5 percent, excluding recent acquisitions. He reiterated his "hold" rating on the stock and said a good re-entry point would be if it fell to $28.

Sanford C. Bernstein analyst Jeffrey Lindsay raised his price target on eBay to $38 from $36, but noted that the company had cobbled together "bits and pieces into a reasonable quarter."

"EBay reported a good first quarter but analysis reveals that it was patched together out of better-than-expected performances at PayPal, Skype, StubHub, Classifieds and Advertising," Lindsay said in a research note.