Market overreaction to eBay Inc EBAY's jump to Adyen as its payments partner creates a buying opportunity for PayPal Holdings Inc PYPL, according to Credit Suisse.
The Analyst
Analyst Paul Condra reiterated an Outperform rating and $91 price target for PayPal.
The Thesis
EBay announced Wednesday it would be working with Adyen as its main payments processor, cutting off PayPal after a 15-year partnership. This alarmed investors, who sold off PayPal shares.
The market has likely overreacted to this news, Condra said in a Thursday note. PayPal will still remain as a payment option on eBay through 2023, the analyst said.
“Little, if any incremental EPS headwind” is expected from the news, as PayPal management has always factored the end of the eBay partnership into their long-term outlook, Condra said.
The winding down of the eBay partnership could represent new growth opportunities for PayPal, the analyst said. Condra described the end of this deal as a “potential positive catalyst” that gives PayPal the opportunity to win partnerships in marketplaces from which it was formerly restricted.
With over $20 billion in buying power, PayPal now plans to invest in organic growth and pursue potential M&A opportunities, according to Credit Suisse.
Price Action
At the time of publication, shares of Paypal were trading down 6.21 percent at $80.02.
Related Links:
Earnings Extravaganza: Apple, Amazon, Among Big Hitters Due Later Today
They Grow Up So Fast:PayPal Now Outperforming eBay
Photo courtesy of PayPal.
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