EBay shares gain 3 percent on positive signs

Shares of eBay Inc. regained some lost ground Tuesday on signs the online auctioneer's business is holding up as expected in the third quarter.

EBay's stock, which fell to its lowest point in two years last week on soft profit guidance, gained 98 cents, or 4.1 percent, to end at $25.04 on positive sentiment about the San Jose-based company's health in a Goldman Sachs research note.

EBay has been hurt by worsening economic strain in the U.S., which has depressed some consumers' appetites for higher-priced items that bring in higher commissions for eBay, and has also been hit by slowing growth amid intensifying competition from other online retailers.

The company also recently lost the leadership of longtime Chief Executive Meg Whitman, who stepped down in March after 10 years on the job, which she said was about as long as any CEO should serve. She turned over the reins to John Donahoe, who headed eBay's auction and e-commerce businesses.

In a note sent to clients late Monday night, Goldman Sachs reaffirmed its $2.15 billion sales target for eBay for the third quarter. Analyst James Mitchell said he is "comfortable" with that prediction because data from the first three weeks of July show that eBay's listings growth appears to be in line with the firm's predictions.

Goldman Sachs is forecasting that eBay's listings will grow 17 percent over the previous year, while eBay's revenue from each listing will decline 12 percent to $1.83. They noted those results could be affected by any decline in the total value of the goods for sale on eBay, pressure from other online retailers like Amazon.com, and general economic weakness.

Those fears helped drive eBay's stock down below $24 last week for the first time since July 2006. Last week, eBay reported a 22 percent jump in second-quarter profit that surpassed Wall Street's expectations, but its earnings forecast for the third quarter fell short of analyst estimates.

EBay blamed economic uncertainty, a shift among the Web site's shoppers toward cheaper items, as well as a rapid decline in the value of some of the items being sold on eBay, such as automobiles.

Analysts surveyed by Thomson Financial currently expect eBay's profit to be 41 cents per share in the third quarter on $2.16 billion in sales. The third quarter ends in September.