Market Overview

Cowen Turns Bullish On PayPal, Says 'Better Later Than Never'

Share:
Cowen Turns Bullish On PayPal, Says 'Better Later Than Never'
Related PYPL
42 Stocks Moving In Friday's Mid-Day Session
Venmo, User Growth, Retail And Bank Partnerships: Analysts Discuss PayPal's Q3
Wall Street Breakfast: What Moved Markets This Week (Seeking Alpha)

Shares of Paypal Holdings Inc (NASDAQ: PYPL) have gained more than 125 percent since the payment name split from its former parent eBay Inc (NASDAQ: EBAY) in 2015, which some investors assume is reason enough to avoid buying the stock at current levels. But this isn't necessarily the case, according to the Street's newest bull analyst.

The Analyst

Cowen's George Mihalos upgraded PayPal's stock rating from Market Perform to Outperform with a price target boosted from $67 to $88.

The Thesis

The case for buying PayPal's stock now is simple: most of the bear theses "have not and will not play out," Mihalos said in Tuesday's upgrade note.

For example, the analyst said he previously thought PayPal's EBITDA growth would fall short of revenue growth. But this isn't the case, as adjusted EBITDA is forecast to outpace revenue growth in 2018 and 2019, while the EBITDA margin is projected to expand by 160 basis points in both years, Mihalos said. 

Another major bear case surrounds PayPal potentially seeing an end to its relationship with eBay, the analyst said. At the very least, the two companies will renegotiate their arrangement, although at less favorable terms — "we believe the impact is manageable," Mihalos said. 

PayPal's stock is trading at a 23x multiple on 2019 estimated free cash flow, in-line with its peers but a discount to the networks. But PayPal boasts one of the "most compelling" growth profiles — 20 percent earnings growth — in the space, which implies there is room for upside in the stock, according to Cowen. 

Mihalos' bullish turn on PayPal is "better late than never," he said. 

Price Action

Shares of PayPal hit a new all-time high of $80.39 on Tuesday and were last seen trading up 1 percent at $79.84.

Related Links:

Bernstein: 10 Disruptive Forces In Payments For 2018

Wall Street Weighs In: Two Analyst's Favorite Stocks In The Payments Space"

Photo courtesy of PayPal. 

Latest Ratings for PYPL

DateFirmActionFromTo
Oct 2018Canaccord GenuityMaintainsHoldHold
Oct 2018BTIG ResearchUpgradesNeutralBuy
Oct 2018NomuraMaintainsBuyBuy

View More Analyst Ratings for PYPL
View the Latest Analyst Ratings

Posted-In: Cowen George Mihalos Payment Processors paymentsAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (EBAY + PYPL)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
AAPLWedbushInitiates Coverage On310.0
DHTJP MorganUpgrades0.0
DISBarclaysUpgrades130.0
DXCMGoldman SachsUpgrades125.0
ORLYJP MorganUpgrades398.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Jamie Dimon Slightly Changes Tune On Bitcoin, Says 'The Blockchain Is Real'

Novo Nordisk Confirms Bid For Ablynx But Faces Rejection