The rating agency Standard & Poor's assigned an "A-" debt rating to online auctioneer eBay Inc. on Monday, citing the company's well-established Internet brand as well as strong cash flow and liquidity.
The "A-" rating is investment grade but signifies that economic conditions may affect the company's finances.
The outlook is "Positive."
In a statement, Standard & Poor's analyst Philip Schrank said, "The rating on eBay reflects its well established brands in Internet e-commerce and payment segments, coupled with strong discretionary cash flow generation and ample liquidity."
Schrank cautioned that risks remain for the San Jose, Calif.-based company on a number of fronts: its performance relies somewhat on ongoing acquisitions, it faces rising competition from traditional retailers, entry costs in its market are low and consumer spending is being pulled back amid a credit shortage.
On the positive side, he said eBay's large customer base and low working capital needs should generate stable profits and cash flow even as the economy slows.
Schrank also predicts eBay's subsidiary PayPal - which processes online payments - will grow as more financial transactions move online. He added that eBay's recent acquisition of Bill Me Later, which allows online shoppers to pay without a credit card, should dovetail well with PayPal, and start generating a profit in the "near term."
The company's stock fell with the broader market Monday, sliding 51 cents, or 3.9 percent, to $12.62.
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