645 ME 3 In April 2003, analysts at Morgan Stanley and Prudential had set twelve-month target prices of $106 and $108 for the firm eBay. At that time, the consensus forecast for eBay?s EPS was $1.45. Subsequently, eBay split its stock two-for-one. Its actual EPS turned out to be $0.82 (post-split, corresponding to $1.64 on a pre-split basis). On April 30, 2004, eBay?s stock price closed above $82 ($164 on a pre-split basis), and the consensus analyst EPS forecast for the subsequent twelve months was $1.18 (post-split). Discuss whether the stock of eBay was efficiently priced in April 2003.
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