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E-commerce service provider eBay Inc. (EBAY - Analyst Report) recently disclosed its business strategy and 3-year (2013-2015) financial objectives. The company expects revenues to increase 50% largely driven by its rapidly growing payment platform PayPal.

eBay expects total revenue to reach $21.5–$23.5billion by 2015, up from $14.1 billion in 2012, driven by continued success in the company’s core businesses. As smartphone usage increases, eBay is well positioned to strengthen its position in the space, which would also help it compete successfully with the largest web retailer Inc. (AMZN - Analyst Report).

Management expects Marketplaces segment revenues of $10.5–$11.5 billion, representing a three-year (2013–2015) compound annual growth rate (CAGR) of 14% at the midpoint, Payment segment revenues of $9.5–$10.5 billion, increasing at a three-year CAGR of 22% and GSI Commerce revenues of $1.5–$1.7 billion, representing a CAGR of 14% at the midpoint.

Non-GAAP earnings are expected to increase at a three-year CAGR of 15%–19% and free cash flow is expected to be greater than $11 billion over the same time frame.

The company stated that various strategic initiatives, including local commerce, mobile innovation capabilities and expansion of its addressable market in developing regions will drive growth and help it to achieve its long-term target going forward.

Today, the biggest driver of growth in the industry is the adoption of smartphones, tablets and other mobile Internet devices. Consumers prefer mobile browsers for shopping, search and entertainment and apps for navigation and acquiring information. Customers have shown a strong desire to order and pay online to avoid hassles associated with shopping at brick and mortar stores.

In order to benefit from this change, eBay is taking all the necessary measures for continued growth in the mobile payment business. eBay continuously introduces new solutions to enhance the mobile shopping experience and rapid consumer adoption makes this a huge growth opportunity. In 2013, the company expects to generate $20 billion of mobile commerce and payments volume.

We believe that eBay has an attractive growth rate and has shown solid execution over the last few quarters. Moreover, eBay’s turnaround story continues and its initiatives to drive growth are likely to pay off.

Aided by growth in its PayPal business and mobile commerce, eBay recorded a strong fourth quarter with both revenues of $3.99 billion and earnings of 63 cents exceeding expectations. eBay’s PayPal remained the star performer, generating total payment volume (TPV) growth of 18.0% and 24.3%, respectively, from the previous and year-ago quarters. PayPal added nearly 2 million accounts a month in the fourth quarter, representing the company’s fastest active account growth rate in years.

Though eBay’s e-commerce business shows great promise, competition may be expected to pick up as banks and other companies announce their own payment systems and Google’ digital wallet gathers steam.

Currently, eBay shares carry a Zacks Rank #3 (Hold). However, online travel company, Inc. (PCLN - Analyst Report), has a Zacks Rank #2 (Buy) and is worth considering.

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