BTIG Sees Negative Reaction to PayPal (PYPL) from Apply Pay Initiatives as 'Overblown'
BTIG affirms PayPal Holdings, Inc. (Nasdaq: PYPL) with a Buy rating and $48 price target, saying recent Apple Pay-related news as a negative to the stock might be overdone.
Analyst Mark Palmer commented, Shares of PayPal Holdings declined by about 6% over two days last week after Re/code on Wednesday reported that Apple Pay would be available to consumers using the Safari browser on those iPhones and iPads that feature TouchID fingerprint technology. Some observers immediately opined that Apple Pay would represent a significant headwind to PYPL's growth that would serve as a detriment to the company's share price.
However, we believe the market reaction to the news was unwarranted as there are reasons to believe that Apple Pay will be less of a threat to PYPL than some may think. For one thing, AAPL's iOS operating system had a global market share of just under 14% as of 2Q15 according to IDC research, which we believe is a limiting factor on a global basis in that as PYPL operates in over 200 countries and generated more than 50% of its net revenues from merchants or consumers domiciled outside the U.S. in 2015.
Moreover, we note that if Apple Pay's new integration has an impact on PYPL's business it would be the first time that it had done so. PYPL has added $15bn to its quarterly run-rate total payment volume (TPV) since Apple Pay was announced in October of 2014.
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