Piper Jaffray Cites Future Competition In eBay Downgrade

In a report published Thursday, Piper Jaffray analyst Gene Munster downgraded shares of

to Underweight from Neutral with a price target lowered to $49 from a previous $55. Munster stated that he previously downgraded shares to Neutral in September based on a belief that Apple Pay will become an increasing threat to PayPal. The analyst added that now Google Wallet, Facebook, Samsung and traditional banks will join the competitive landscape and "weigh on PayPal valuation and market share." Munster continued that PayPal's business is "strong" as it is today with 2014 revenue of $8 billion and growing at 19 percent. Point of sale has contributed zero to the success of PayPal, implying the company can continue a steady, healthy growth without point of sale, according to the analyst. "We are cautious on PayPal as we believe it does need point of sale product that consumers will use," Munster wrote. "Consumers will increasingly require an omni-channel wallet (online, in-app, in-store, and peer-to-peer)." Munster added that PayPal's business will remain healthy for the next year and over time competitors will take their existing in-store and in-app wallets and migrate it to mobile browsers, peer-to-peer transfers and eventually to desktop browsers. With that said, investors should attribute a lower multiple to PayPal's valuation today even though any fundamental impact is more than a year away.