PayPal Holdings Inc. reached an all-time high last week, with the company’s stocks closing at $66.05 at the end of the trading week. The S&P 500 also closed on a high, with the tech sector leading gains, and, in that sector, PayPal was the strongest player. The stocks were up 0.23% from the previous day. The company’s stocks have grown tremendously this year, with its YTD growth at 67.34%, vis-à-vis the S&P 500 index growth of 15.42%.
PayPal Shares Hit All-Time High
PayPal has been going from strength to strength this year. The company has a market cap of $79.42 billion, which is expected to grow much more.
The latest high in the company’s stocks is due to the expectation that the peer-to-peer payment service, Venmo, could expand to include merchants too. Venmo is PayPal’s mobile payment service. A person can transfer money using a mobile app or web interface. It has also been described as a “digital wallet”.
Venmo is especially popular with millennials due to its social media component. This app was created so that people could split bills (movies, coffee, or any other kind of transaction where a person might share a bill with another person). Once a transaction is made, the bill amount (minus the fees charged by Venmo) is posted on the user’s news feed, pretty much like, say, a Facebook newsfeed. This app was not made to transfer money to strangers, but to people known to each other – a peer-to-peer network.
The success of Venmo has been such that analysts are hoping to see this app expand beyond a peer-to-peer network and truly make financial transactions become cashless, in that it will also include millions of merchants who could interact through this medium.
PayPal has also been top of mind for numerous analytics firms. 53 firms are covering this company, and of these, 36 have given PayPal a “buy” rating, 15 a “hold” rating and only 2 have given it a “sell” rating. The price targets given by analysts range from $81.00 at its highest to $31 at its lowest. The current average price target is $57.43, which is 13.05% below the company’s closing share price of $66.05.
Bank of America’s analysts gave the company a “strong buy” rating and increased their stock price target to $78.00. Barclay’s Capital has given the company an “overweight” rating, Wedbush gave an “outperform” rating, Oppenheimer rated it “outperform” and Argus Research also gave the company a “buy” rating. Cowen & Co. gave PayPal a “hold” rating. Deutsch Bank gave the company a “buy” rating. Bernstein gave the company a “market perform” rating. RBC Capital Markets kept its “buy” rating.
BidaskClub upgraded its rating from “buy” to “strong buy”. Robert W Baird and Credit Suisse Group re-stated their “outperform” ratings.
According to Analysts
Analysts are expecting the third quarter results to be outstanding, with a 10.34% growth on Earnings per Share (EPS) from the previous quarter. The last quarter saw an EPS of $0.29. The expectation is that the company will generate a $0.03 increase in its EPS.
Another big hit for PayPal has been its recent partnership with MasterCard. The joint venture between the two companies was tried in the US first. Last week, the companies announced that this joint venture would now go global, with operations expanding to Canada, Europe, North Africa, the Middle East, the Caribbean and Latin America.
Through this partnership, MasterCard will be the default payment option in PayPal apps, being able to cash-out on MasterCard debit cards and being able to make contactless payments in all stores that accept contactless MasterCard payments.