PYPL

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Some other stuff to consider:

So why downgrade at all? Well, after running through the points in PayPal's favor, Compass Point does allow for a few reservations about PayPal management. In particular, the analyst wasn't enthused by PayPal's decision to spend $890 million to buy international money transfer company XOOM last year. Compass Point characterizes this as a worry over "capital allocation discipline." But in plain English, they mean that they're worried PayPal will continue to overpay for new subsidiaries given "the company's continued focus on acquisitions in a seller's market."

And speaking of acquisitions, Compass Point throws cold water on the theory that PayPal itself might be acquired so soon after splitting off from eBay. Compass Point discounts the possibility that such an acquisition will provide a catalyst to grow PayPal's stock price. Why? Quoting directly, the analyst says "an acquisition of PYPL is unlikely near-term given that such a deal would be quite large (likely $55bn+) and few buyers could pay that price."

Even acknowledging that PayPal is a better cash generator than meets the eye, and that it produced $1.8 billion in free cash flow last year, versus only $1.2 billion in GAAP earnings, the stock's enterprise value-to-free-cash-flow ratio sits north of 24 today. While that's not an unheard-of valuation in the red-hot financial tech sector, it's not exactly a bargain price.

PayPal Stock Downgraded: Here Are 3 Reasons Not to Panic -- The Motley Fool