Citi: Buy PayPal

In a report published Wednesday, Citi analyst Ashwin Shirvaikar initiated coverage of Paypal Holdings Inc PYPL with a Buy rating and price target of $47. The analyst believes that the company has the ability to sustain a net revenue growth rate of over 15 percent, which would translate into EPS growth of 18 percent.

According to the Citi report, "Other financial metrics are strong and PayPal "starts" life with ~$6 billion in net cash as a result of its spin from EBAY. There are some clear positives with regards the investment case for PYPL (see below) but there is also a high level of uncertainty."

Related Link: Barclays Starts PayPal At Overweight, Sees '1st Mover Advantage' In eCommerce Topping Competitive Risks

Although the stock is valued at a premium, the analyst believes that it is justified by the "quality and scarcity value of such an asset." The company offers both merchants and consumers a technology platform for digital and mobile payments, with 169 million active accounts being transacted across 26 different currencies and 203 countries.

"The financial position and operating performance gives PayPal considerable strategic leeway to adapt to digital change," Shirvaikar added.

Paypal has been witnessing robust growth with TPV growing at an Fx adjusted 28 percent in 2Q15, along with mobile transaction growth of over 40 percent. The analyst believes that the company's growing network can help sustain this growth.