PayPal Spin Worth $35-40 Per Share, Wedbush Says
In a report published Thursday, Wedbush analyst Gil Luria said that the completion of the PayPal, Inc. spin off from eBay Inc (NASDAQ: EBAY) is expected within the next few weeks. The valuation at spin off is expected at $35-$40 per share.
"CEO Schulman and CFO Dupuis presented their plans for the new PYPL at a NYC event. Management's message was of PayPal being well positioned as a market leader in an evolving payment landscape being transformed by mobile," Luria reported.
PayPal is expected to becoming a long-lasting leader of the payments market, with revenue and earnings growth of more than 15 percent likely over the next several years. The analyst also expects PayPal to choose to partner with retailers with the alignment of camps around the large mobile wallet service providers.
"We believe that the lack of growth on eBay Marketplace will continue to drag down PayPal's overall growth. We expect trade-off between volume growth and take rates to continue. Guidance for mid-20 percent TPV growth implies continued take rate erosion, a result of the mix shift to larger retailers and lower yielding person-to-person transactions," Luria added.
Although the management expects declining take rates to lead to a decrease in transaction margins, the analyst believes that the decline could be offset by stabilizing investments, going forward.
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