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Why One Analyst Is Incrementally More Bullish On His Top Pick: PayPal

Why One Analyst Is Incrementally More Bullish On His Top Pick: PayPal
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Monness Crespi Hardt analyst James Cakmak is now the most bullish Paypal Holdings Inc (NASDAQ: PYPL) analyst on the Street, reiterating a Buy rating and upping his price target from $54 to $70.

The firm’s “top idea for 2017” has an average price target across analysts of around $55. After jumping over 3 percent on Wednesday, PayPal shares were trading in the $57-handle before the open Thursday.

The company has had a strong run this year, up over 43 percent, but Cakmak still sees room for upside with Venmo and new mobile platforms being key drivers (see Cakmak's track record here).

Catalysts At Work

In just a few months, Pay with Venmo will officially launch, allowing users to pay of merchants across the country with the app.

The analyst believes the service will be a significant benefit to margin growth, especially as the company looks to expand its enterprise business to a full suite of mobile solutions.

In April, PayPal announced a deal with Android Pay, allowing the service to be used on the millions of phones powered by Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)’s Android operating system.

The deal was limited to domestic payments, but Cakmak sees it expanding to international markets in the future.

Paypal also announced a deal with Apple Inc. (NASDAQ: AAPL), making it available through Apple Pay across the latter’s services. The news led to Wednesday’s share price spike.

Besides opening up new opportunities for the company, Cakmak believes the deal will diminish risk from competitors moving forward.

Less talked about, Braintree’s close partnership with Facebook Inc (NASDAQ: FB) could yield an currently underestimated windfall. In the near-term, the business could be incorporated into efforts by Facebook to monetize publishers.

PayPal will report its second quarter earnings on July 26.

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