BMO Capital Upgrades PayPal To Outperform; Cuts Price Target By 19.4%

BMO Capital analyst James Fotheringham upgraded PayPal Holdings Inc PYPL to Outperform from Market Perform with a price target of $224, down from $278. The price target implies an 18.8% upside.

• Fotheringham cites valuation for the upgrade following 2021's "de-rating," where the stock went down from 51x to 28x on a rolling two-year-forward price-to-earnings basis.
• Tax-loss selling is done, and investors are focused on more normalized 2023 estimates for valuation.
• Fotheringham sees 21% annual organic revenue growth potential for PayPal and believes payment stocks are "set up constructively for this year."
• Fotheringham recommends buying PayPal along with Nuvei Corp NVEI and Global Payments Inc GPN as GARP-oriented opportunities.
• Fotheringham recommends Mastercard Inc MA and Visa Inc V as core holdings.
• Price Action: PYPL shares traded higher by 1.92% at $192.20 in the premarket session on the last check Monday.