There are some worries that Apple pay will cut into PayPal's turf. Here is a bullish analist, although we're already almost at his price target ($42):
Analyst Daniel Perlin of RBC Capital weighed in on PayPal following positive survey data by the company and comScore on its One Touch payment platform.
The study indicated that One Touch has doubled the conversion rates of more traditional platforms such as Visa. Specifically, the company’s conversion rates came in at 87.5% vs. Visa Checkout at 51.1% and more traditional models at 45.6%. He states, “We believe this key statistic supports our belief that the One Touch strategy/ solution bridges the gap from PYPL’s legacy browser-based model to a mobile first model.”
Diving deeper into the survey, Perlin notes that PayPal moved up 14.5 points from its conversion rate from a similar survey in 2H15. Related, PayPal also released a One-Touch info graphic showing impressive growth. The company displayed One-Touch usage of 21 million consumers vs. 10 million in December 2015 and 203 consumer markets compared to only 23 in December of 2015.
The analyst believes this positive data on One-Touch represents a first-mover advantage. He remarks that as consumers increasingly shift to mobile to make payments, “the ability to automatically be authenticated on your chosen device (mobile, tablet, browser) vs. requiring a login and password… meaningfully reduces the consumer friction points that have historically existed.”
Perlin also notes that this positive survey data reinforces his bullish investment view on the company. The analyst predicts long-term growth for the company as a result of a “compelling long-term market opportunity in digital commerce;” the company’s market leader position in e-commerce payments; increasing consumer shift to mobile; and margin expansion. He also notes that “the “secret sauce” of Venmo and PayPal Credit [allows] the company to increase the profitability of transactions inside the Paypal Network.”
The analyst reiterates an Outperform rating on the company with a $42 price target.
According to TipRanks, Daniel Perlin has an 82% success rate recommending stocks with an average return of 17.1% per recommendation. Out of all the analysts who have rated the company in the past 3 months, 57% are bullish, 4% are bearish, and 38% remain on the sidelines. The average 12-month price target for the stock is $42, marking a 7% upside from where shares last closed.