NEW YORK (CNN/Money) - Internet auction company eBay reported sharply higher sales and earnings for the first quarter Tuesday, easily topping Wall Street forecasts, and raised its targets for 2003 as well.

EBay reported net income of $104 million, or 32 cents a share, more than double the $48 million, or 17 cents a share, it earned a year earlier. Excluding merger-related costs and amortization of stock-based compensation, eBay earned 36 cents a share, above average forecasts of 31 cents excluding charges, according to First Call.

Sales jumped to $476.5 million, above the consensus estimate of $457 million, from $245 million.

Meg Whitman, eBay's president and CEO, said during a conference call that the company had worried that the war in Iraq would have a negative impact on business but that clearly was not the case.

Registered users, another key metric for the company, also had strong growth. EBay had 68.8 million registered users at the end of the quarter, up 49 percent from a year ago and 7 percent sequentially.

EBay has been one of the market's better performers this year, with the stock rising more than 30 percent, raising some concerns about the stock's valuation. Shares of eBay (EBAY: Research, Estimates) fell 1.7 percent ahead of the report but then surged in after-hours trading, jumping $2.78, or 3.1 percent, to $92, according to Instinet.

EBay said that sales could hit $2.05 billion this year, slightly higher than the consensus estimate of $2.0 billion. For the second quarter, eBay said sales could come in at $500 million. Analysts were expecting $474 million.

The company also raised its earnings targets, saying that earnings excluding charges could come in as high as $1.41 a share. Analysts were expecting $1.34 a share. Including charges, eBay said earnings could be as high as $1.27 a share.

For the second quarter, eBay said earnings, excluding charges, could be 33 cents a share. Analysts were expecting a profit of 32 cents a share.

Analysts said that it's hard to find anything wrong with the report, saying it seems eBay has done a solid job so far of integrating online payment services company PayPal, which it acquired last October.

Steve Weinstein, an analyst with Pacific Crest Securities, said that strength in PayPal was a big reason why eBay beat estimates so soundly. He said he was expecting PayPal's revenues to be $80 million for the first quarter. The unit wound up reporting revenues of $94 million. He does not own eBay and his firm has no investment banking relationship with the company.

EBay's international business also grew at a sizable rate. International revenues were up 166 percent from a year ago and 28 percent from the fourth quarter of 2002. Nearly 30 percent of eBay's sales are from outside the U.S. Whitman said that she thinks international sales will eventually be higher than U.S. sales but would not say when she expected this to take place.

Profit margins for the company were also solid, thanks to eBay's relatively low cost structure. The company reported operating margins of 31 percent, compared with operating margins of 28.9 percent a year ago.

The question now is valuation. Even though eBay raised guidance, the stock is still trading at about 63 times 2003 earnings estimates, excluding the charges.

"With the increase in guidance and a very strong quarter under its belt, valuation becomes less of an issue, but it doesn't mean that it's off the table. The valuation seems full," said Derek Brown, an analyst with Pacific Growth Equities. Brown said he sees little near-term upside for the stock. He does not own it and his firm has not done investment banking for the company.

But Shawn Milne, an analyst with SoundView Technology Group, has a target price of $100 for eBay and said that given the poor environment for tech stocks, investors will probably continue to be willing to pay up for a company like eBay that has consistently generated strong earnings and sales growth as well as high profit margins. Milne doesn't own eBay and his firm does no banking for the company.