Stifel Upgrades PayPal (PYPL) to Buy Following 'Solid' Q3 Results
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(Updated - October 21, 2016 8:46 AM EDT)
Stifel upgraded PayPal (NASDAQ: PYPL) from Hold to Buy with a price target of $49.00 (from $43.00). Analyst Scott W. Devitt called Q3 results solid across the board and highlighted its stable, consistent, and robust growth.
"We like businesses with sustainable competitive advantages, long growth runways, and strategically-minded management. We increasingly believe that PayPal fits the profile we look for in long duration consumer technology investments and is the type of business that growth investors should own for the long-term," said Devitt. "Recent events, including this evening’s earnings report, lead us to break to the positive on long-standing PayPal debates including mobile platform technology risk (Apple, Alphabet), supplier risk (Visa/MasterCard), innovation risk (One Touch), and credit risk."
The analyst added, "We have seen (1) limited impact from recent Apple/Alphabet initiatives, (2) deals with Visa/MasterCard projected to still allow for stable/improving medium-term margin, (3) One Touch is now approaching 36mm consumers at 5mm merchants, and (4) management has suggested a coming shift to a more asset light credit model (something we supported in a recent note). We believe PayPal’s multiple is going to rise on the back of positive resolution of recent debates and that the stock will begin to trade more like a technology platform company. We would be aggressive buyers of the PayPal shares with a $49 12-month Price Target, supported by our DCF analysis."
Shares of PayPal closed at $40.09 yesterday.
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