Wedbush Names PayPal As A 'Best Idea,' Projects 20% Upside

Three notable catalysts ahead should propel Paypal Holdings Inc PYPL shares higher by around 20 percent, according to Wedbush.

The Analyst

Wedbush's Moshe Katri maintains an Outperform rating on PayPal's stock with a price target lifted from $90 to $100. The analyst placed PayPal on Wedbush's "Best Ideas List."

The Thesis

PayPal has three notable catalysts ahead, Katri said in a Friday note:

• The recent acquisition of iZettle, which will "significantly" improve its merchant-facing business, as it gives 19 million merchants a new omnichannel platform for conducting their business.
• Consumer-facing monetization efforts, including "Pay-With-Venmo," that will result in improving volume trends.
• The finalization of the split with eBay Inc EBAY will open new opportunities for PayPal in similar market places, Katri said. (See the analyst's track record here.) 

PayPal's agreements with major credit card networks to eliminate steering and share transaction data should prove to be a "significant" driver of volume growth over the longer term, the analyst said. PayPal will also benefit from reduced onboarding friction, fee concessions, access to tokenization and permission to work with issuers, he said.

These benefits will be enough to offset any future negative impact from terminating steering, Katri said. 

Taking a "big-picture perspective," Stifel projects that "explosive" transaction growth online and offline should result in 15-20-percent revenue growth over the coming years and 10-15-percent EPS growth.

Price Action

PayPal shares were trading nearly flat at the time of publication Friday morning. 

Related Links:

PayPal Has 'Strong Secular Tailwinds,' $110T Total Addressable Market, Stifel Says In Upgrade

Morgan Stanley: PayPal-iZettle Deal Presents A Challenge To Square

Photo courtesy of PayPal.