Big Catalyst Coming for eBay's (EBAY) PayPal Unit in China, Analyst Says

Compass Point is out with a few comments on eBay (Nasdaq: EBAY) into a "major" catalyst. The firm has eBay at Buy with a price target of $63.

Analyst Doug Greiner says that eBay getting a payments license for its PayPal unit in China would be huge. Obtaining the license could take three months or five years, as there is limited visibility, according to eBay CEO John Donahue.

eBay processed $176 billion of payments in 2012, with PayPal accounting for $97 billion of the total. Though the company doesn't specifically disclose China numbers, Greiner noted that $3.2 billion of the total $75 billion of Marketplaces payment volume was made from mature market sellers to emerging market buyers (BRICs, etc.). The company also said it sees that sales number moving to $12 billion by the end of 2015.

Greiner sees the licensing opportunity for eBay's PayPal in China as incremental to the $12 billion per year estimate. Customers in China are allowed to use PayPal for cross-border transactions, but are not allowed to do so for domestic purchases. That is a significant opportunity for eBay.

Risks once the license is obtained include "consumer acceptance, placement on merchant websites, and presence at the check out."

Shares of eBay are down 0.5 percent early Thursday.

For an analyst ratings summary and ratings history on eBay click here. For more ratings news on eBay click here. Shares of eBay closed at $52.23 yesterday, with a 52 week range of $38.06-$58.04.

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