Paypal Holdings Inc. 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. 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
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