eBay shares are down 1.6% ahead of this morning's opening bell after Bear Stearns downgraded the stock from outperform to peer perform. In a note, the broker said, While eBay has implemented (or begun to implement) many positive changes, it is our view that there will still be more investment needed in 2008 and that eBay would sacrifice near term financials to maximize the future for the company. Among its concerns, Bear believes that margins will suffer in the near term.

Bear also lowered its per-share earnings estimates for 2008 and 2009, dropping them from $1.64 to $1.55 and from $1.90 to $1.80, respectively. While Bear Stearns' outlook for the shares is less-than-rosy in the short term, it believes eBay is on the right track in the long term: Based on how we think the data will turn out, it's our preference for eBay to make the necessary... investments, even though the stock could languish in the short term.

Unfortunately for eBay, it's highly vulnerable to more potential downgrades if more brokers decide to follow Bear's lead. Zacks reports that the stock has 11 strong buys and 1 buy, compared to just 6 holds and 2 sells. Option traders have already turned bearish on the shares; its Schaeffer's put/call open interest ratio of 0.83 is just 4 percentage points away from an annual peak.