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PayPal's Digital Payment Momentum Outweighs Risks

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PayPal's Digital Payment Momentum Outweighs Risks

Paypal Holdings Inc. (NASDAQ: PYPL) was upgraded by Piper Jaffray after the company beat revenue and EPS estimates when it reported first quarter earnings Wednesday.

Paypal faces “significant long-term competitive risks” in the form of transaction economics and the company’s market share, analyst Jason Deleeuw said in a note. Merchants, though, have been slow to accept — and consumers have been slow to use — competitors, Deleeuw said.

Deleeuw upgraded Paypal from Underweight to Neutral and raised its price target from $41 to $45.

Strong growth in digital payments “likely keeps estimates biased upward through 2018” for Paypal, according to Piper Jaffray.

Partnerships Key In The Long-Term

Paypal’s partnership with Android Pay “is a smart strategic step toward reducing long-term competitive risks,” Deleeuw said.

Paypal could benefit from similar partnerships with other mobile wallets such as Apple Inc. (NASDAQ: AAPL)’s Apple Pay and Samsung Pay so it’s used seamlessly, according to Piper Jaffray.

Multiple companies have entered Paypal's space in recent years, but the company still leads the pack with 180 million active consumer users.

The company acquired TIO Networks, a Vancouver-based bill payment processor, for $233 million in February.

Related links:

Losing PayPal May Have Actually Helped eBay 

Look For PayPal's Growth Momentum To Continue In 2017

Latest Ratings for PYPL

DateFirmActionFromTo
Jul 2020Piper SandlerInitiates Coverage OnOverweight
Jul 2020WedbushMaintainsOutperform
Jun 2020JMP SecuritiesInitiates Coverage OnMarket Outperform

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