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Why Analysts Are Chasing PayPal Targets Ever Higher
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PayPal Holdings Inc. (NASDAQ: PYPL) reported better than expected earnings in its quarterly report, sending shares up as much as 3% on Thursday. The company still struggles to get the respect as an independent company after last year’s spin-off from eBay Inc. (NASDAQ: EBAY).
PayPal is one of those companies that has great growth ahead but which many analysts, investors and competitors alike wonder if it will prevail in the growing world of payments technology. Fortunately for those who worry too much about the growing pressure, PayPal has been a trusted source of payments for a decade or more for millions of consumers. There are many forms of payments now, real (Apple, Visa and on and on) and virtual (Bitcoin, etc.).
In the day and age of consumers having a compromised trust of new services tying into their bank accounts, and with the fear of cybertheft being so high, consumers might just want to keep using the payments services they already know and trust. That plays right into the hands of PayPal.
Another boost is that PayPal is not just the service you know only from eBay auctions. Its brands and lines also include PayPal Credit, Braintree, Venmo and Xoom, and it operates in more than just the U.S. dollar and more than just the U.S. jurisdiction.
24/7 Wall St. tracked many key analyst reports after PayPal’s earnings beat. Most contained price target hikes, some of which looked aggressive. These were the analyst calls we tracked late in the week:
- Barclays has an Overweight rating and raised its price target to $46 from $43.
- Canaccord Genuity has a Buy rating and raised its price target to $45 from $40.
- Cowen raised its target price to $38 from $33.
- Goldman Sachs has PayPal on its Conviction Buy list and raised its price target from $46 to $47.
- Keefe Bruyette & Woods has an Outperform rating but raised its price target from $43 to $46.
- Mizuho has a Buy rating and raised its price target to $46 from $40.
- Piper Jaffray has an Underweight rating and raised its price target to $34 from $33.
- RBC Capital Markets has an Outperform rating and raised its target to $46 from $42.
- Robert W. Baird has an Outperform rating and raised its target to $48 from $45.
- UBS raised its price target from $40 to $42.
- Wedbush Securities has an Outperform rating and raised its price target to $47 from $45.
Credit Suisse did not chase its $42 price target higher but did maintain its Outperform rating. The firm said that its target is derived from a 50/50 blend of 22 times expected 2017 earnings and 15 times its 2017 EV/EBITDA. The firm sees it as a thematic Outperform despite valuations and competition.
PayPal shares were trading down 2.2% at $39.18 on Friday’s close, within a 52-week range of $30.00 to $42.55. Its market cap is now $47 billion.
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