Market Overview

Bernstein Ponders Potential PayPal M&A

Share:
Bernstein Ponders Potential PayPal M&A
Related PYPL
Benzinga's Bulls And Bears Of The Past Week: Chevron, Coach, Ford, PayPal And More
35 Biggest Movers From Friday
Top-Rated Stocks Near Buy Point Ahead Of Earnings: Total System Services (Investor's Business Daily)

In a note released Wednesday, Bernstein discussed the various permutations and combinations concerning M&A involving Paypal Holdings Inc (NASDAQ: PYPL). The firm noted that its early July upgrade of PayPal was based on a predicted strategic acquisition it will likely make in the coming months.

As such, the firm maintains its Overweight rating and $66 price target for the shares of PayPal.

Analyst Lisa Ellis listed the potential acquisition targets, categorizing them as top candidates and less-likely candidates.

Top Candidates

  • Adyen: $5 billion, plus, price tag; Braintree of continental Europe.
  • Klarna: $2.5 billion, plus, price tag; PayPal credit++ of Scandinavia.
  • Square Inc (NYSE: SQ): $10 billion, plus, price tag; merchant of record capabilities and in-store SMB presence synergistic.
  • Stripe: $9 billion, plus, price tag; Braintree competitor.

See also: The Spin-Off ETF Spins To New Highs

Less Likely Candidates

  • WIRECARD AG UNSPON ADR EACH REP 0.5 ORD (OTC: WCAGY): $11 billion, plus, price tag; WORLDPAY GRP PLC UNSPON ADR EACH REPR 3 ORD (OTC: WPYGY) of Germany.
  • Shopify Inc (US) (NYSE: SHOP): $11 billion, plus, price tag; SMB-centric e-commerce service provider.
  • Sumup: mPos provider.
  • Transferwise: Xoom competitor.
  • Nets: $5 billion, plus, price tag; Vocalink of Nordics.
  • Synchrony: credit partner.
  • Vantiv Inc (NYSE: VNTV)/Worldpay.
  • Global Payments Inc (NYSE: GPN).
  • First Data Corp (NYSE: FDC): processing partner.
  • Discover: In-store partner.

PayPal Unlikely To Be Acquired

Meanwhile, Bernstein believes PayPal is unlikely to be acquired, given that few players can afford a $75 billion, plus, price tag. Additionally, the firm believes PayPal is likely more valuable independent than owned by those that could.

The firm sees dis-synergies or unclear deal rationale if PayPal was bought by Amazon.com, Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG), Facebook Inc (NASDAQ: FB), Visa Inc (NYSE: V), Mastercard Inc (NYSE: MA), JPMorgan Chase & Co. (NYSE: JPM) or Wells Fargo & Co (NYSE: WFC).

Although a merger with Alibaba Group Holding Ltd (NYSE: BABA)-owned AliPay would make sense, the firm feels the merger would likely be stymied by regulators. The firm also ruled out American Express Company (NYSE: AXP) interested in PayPal, as it would now conflict with Choice.

That said, Bernstein believes the strong performance will continue over the coming year, catalyzed by a likely strategic acquisition, the forthcoming credit partnership intended to shift the company's credit business off-balance sheet and earnings outperformance, driven by recent pricing actions and the rollout of Choice

Related Link: What Will Alibaba Do With MoneyGram?
_________
Image Credit: By Sagar Savla - Own work, CC BY-SA 3.0, via Wikimedia Commons

Latest Ratings for PYPL

DateFirmActionFromTo
Oct 2017BairdMaintainsOutperform
Oct 2017BMO CapitalMaintainsOutperform
Oct 2017BarclaysMaintainsOverweight

View More Analyst Ratings for PYPL
View the Latest Analyst Ratings

Posted-In: Bernstein Lisa EllisAnalyst Color Reiteration Analyst Ratings Tech Best of Benzinga

 

Related Articles (AAPL + AMZN)

View Comments and Join the Discussion!
Loading...

Partner Center

Loading...