Bryan Keane of Deutsche Bank held a fireside chat with PayPal's CEO Dan Schulman, who was "extremely confident" in the company's business model given the "multifaceted growth opportunities" ahead.
Many Growth Opportunities Ahead
Keane expanded that PayPal's growth opportunities include adoption of One Touch, triple digit growth at Braintree (expected to surpass $50 billion in processed volume), a large merchant omni-channel strategy, accelerated sign-up of small merchants, international expansion, increased frequency of consumer usage and the upcoming monetization of Venmo later this year or early next year.
Keane singled out Braintree, noting that it is a "leading mobile payments platform" given its developer-friendly ease of integration, open API format and reduced setup time from days/weeks to hours. Moreover, PayPal expects to take its recently acquired Xoom platform beyond the United States with plans to use more than 35 bank relationships internationally to facilitate further cross border payments.
CEO's Input
"The CEO believes nothing in the competitive landscape will change the inherent future leverage of the business model," Keane wrote. "Paypal expects take rate to moderate given the push into large merchants where pricing has always been competitive but will be accretive to margins given scale efficiencies."
Finally, Schulman reiterated the company's mid-term three-year outlook of "stable to growing" margins with "significant leverage inherent in the model" given units of scale on the company's operating expenditure.
Shares remain Buy rated with an unchanged $42 price target.
Image Credit: Public Domain© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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