Equity Research Price Objective Summary for Multiple Companies

{mobile apps, premium nanny, date night payment services etc.) may not see much traction, 4) lower conversion rates on mobile, 5) mobile conversions with 30% fee to Apple and Google Play marketplaces could negatively impact margins, and 6) international expansion may not be successful given different demographics. Upside risks to our PO are 1} lower marketing spend resulting in higher margins and better leverage in 2016, 2) revenue upside from cross-selling and word of mouth, 3} increase length of stay for paid subscribers, reducing churn, and 4) traction from new care offerings, Care at Work, and international expansion. eBay (EBAY) Our $38 price objective is based on 17x our 2018E EPS. Our 17x P/E multiple is slightly ahead of the retail comp group average of about 16x, reflecting eBay's potential for a Marketplace growth acceleration in 2017. Risks to our price objective are: 1) competition from Amazon and other new Marketplaces in the U.S., competition from Amazon, Alibaba and local incumbents in International markets, and competition from multi-channel retailers that are aggressively investing in the online channel, 2) vulnerability to future Google algorithm changes, 3) decelerating user growth, resulting in eCommerce market share losses, and 4) currency risk including FX volatility impact on cross border trade. The stock has been subject to heavy volatility in the past based on GMV growth and market share trends and this volatility could increase due to economic uncertainty. Expedia (EXPE) Our $146 price objective is based on our sum of the parts (SOP) that assumes 9x 2018E EBITDA for the core OTA business (a discount to Priceline at approx. 15x due to slower organic growth and higher taxes on earnings), 8x 2018E EBITDA for Egencia (we expect single digit growth), 60% ownership of Trivago (using our PO), and HomeAway at 15x 2018 EV/EBITDA. Downside risks to our PO are: 1) economic downturn leading to fewer travel bookings, 2) competition for European traffic lowering the company's growth or margin opportunity, 3) hotels favoring lower-cost alternative distribution channels and limiting Expedia's access to inventory, 4) Google and/or TripAdvisor disintermediation, and 5) the negative impact of terrorism and disease on global travel trends. Facebook (FB) Our $165 price objective is based on 24x our non-GAAP 2018E EPS and 27x GAAP EPS, multiples equal to about 1x 2018E revenue growth, mostly in-line with its social and online media peers. Risks are: 1) high valuation that discounts strong growth, 2) changes in user engagement impacts optimism on revenue opportunities and compresses the stock multiple, 3) privacy issues or pushback on Facebook's policy changes impact revenue generation, 4) risks to executing Messenger & WhatsApp monetization, 5) potential for higher investment to negatively impact margins, and 6) a macroeconomic impact on advertising pricing. Fitbit (FIT) Our $6.50 price objective is based on 0.5x EV/S multiple which is below the device manufacturer peer group at 1.8x, but justified in our view given declining revenue and profitability, FCF burn, market saturation, and limited visibility into the next product cycle. Upside risks are: 1) international product launches and expansion, 2) higher-than- expected ASPs, 3) new product launches domestically, 4) slower-than-expected OpEx ramp, 5) software monetization and 6) corporate wellness program growth. 54 Internet/e-Commerce | 06 April 2017 Bankof America <2 Merrill Lynch HOUSE_OVERSIGHT_014940