PayPal (PYPL) Pricing Change Should Boost Profits by 4% - Deutsche Bank

Deutsche Bank analyst Bryan Keane reiterated a Buy rating and $310.00 price target on PayPal (NASDAQ: PYPL) noting the company is making key changes to its US seller user agreement that will have the net effect of increasing pricing, generating a ~4% annual rev lift with close to 100% incremental margins.

The analyst stated "The pricing changes likely only impact US SMBs as mid-large merchants tend to have special discounted pricing agreements (although we wouldn’t be surprised to see similar pricing changes to come internationally to SMB by next year). Under the new user agreement, for PYPL digital payment methods (e.g., PayPal Checkout, Pay with Venmo, Pay in 4, Checkout with crypto, etc.) that use the company’s branded products, PYPL has raised rates for online transactions to 3.49% + $0.49 per transaction from 2.90% + $0.30 per transaction previously. Taken together, this represents roughly a ~27% increase." "While PYPL included these new price changes in its guidance (PYPL did not make any pricing adjustments in 2020 due to the pandemic), we believe the positive impact the revisions have on take rate and PYPL’s rev growth will give investors additional confidence in the positive PYPL trajectory."

For an analyst ratings summary and ratings history on PayPal click here. For more ratings news on PayPal click here.

Shares of PayPal closed at $283.38 yesterday.

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