Susquehanna analyst James Friedman upgraded the rating on PayPal (NASDAQ:PYPL), a digital payments platform provider, to Buy from Hold. The rating upgrade is based on Friedman’s optimistic view of the company’s enhanced focus on achieving profit growth. Also, his price target of $71 implies an upside potential of 20.4% from the current level.
Following the analyst’s bullish review, PYPL stock gained 2% in the regular trading session yesterday.
Interestingly, Friedman’s track record on PayPal is noteworthy, with a 61% success rate on his calls for the stock. This implies that copying his trades and holding each position for one year would result in about 61% of your transactions generating a profit, with an average return of 7.09% per trade. (See the image below.)
Reasons for Friedman’s Optimism About PYPL
Friedman’s optimism stems from several factors. He is impressed by the new leadership‘s strategy, which includes rolling out new products and boosting operational efficiency.
Also, he expects PayPal to beat analyst estimates in transaction-margin dollar growth and adjusted earnings before interest and taxes (EBIT) in the coming years.
The analyst sees new product launches and an improved rewards program as potential drivers. He also thinks that the company’s innovative products, such as the new Fastlane by PayPal, which enables one-click guest checkouts, could be a game-changer during the busy holiday season.
Is PayPal a Buy or Sell?
The company’s new offerings should attract more customers and boost user engagement. This is expected to increase transaction volume and revenue. However, growing competition in digital payments is a concern.
On TipRanks, PayPal has a Moderate Buy consensus rating based on 13 Buy and 16 Hold recommendations. The analysts’ average price target on PYPL stock of $74.50 implies a 26.34% upside potential. Shares of the company have declined 4% year-to-date.
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