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Consumer discretionary

Experts Believe Visa Inc-Paypal Holdings Inc Partnership Could Present Upside: Wedbush

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Wedbush analyst reiterates Outperform rating for Paypal

Gil Luria at Wedbush maintained Outperform rating for Paypal Holdings Inc (NASDAQ:PYPL). He mentioned his viewpoint on the company that it would continue to dominate as leader in ecommerce payments, as its partnership with Visa presents unprecedented upside potential to the stock.

He presented his perspective after an advisor call on partnership between Paypal and Visa earlier on Monday, July 25 between former Head of Consumer Products at Paypal and former Vice President of Mobile Payment Solutions at Visa.

The panelists in the advisor call confirmed that Paypal and Visa had been in talks related to a possible partnership for many years. They also mentioned that the partnership would present benefits to both the companies. Also, the narrative related to Visa which pushed Paypal in the partnership is more or less congruent with these facts.

The analyst mentioned according to panelists, although the lower interchange rates are not possible for sure, but over time and several other aspects of Paypal and Visa partnership, such as access to reduction in fraud, tokenization, access to card and the ability for working with issuers would improve user experience for Paypal.

Also, the former executive at Visa presented his thought that the decision has stabilized position for Paypal in lieu of future of payments, which doesn’t allow any other technology companies from benefitting a preference from other networks.

Wedbush’s analyst made no changes to his Price Target of $50.00 for the stock; this presents 31.10% upside potential from its current price level of $38.14. The Price Target presented a 30x multiple on the 2017 expected earnings per share (EPS). This presents about 20% premium to Visa, which is pretty much justified by its fast, rapid and accelerating growth.

The Street analyst covering the stock has presented a price target of $44.06, much lower than Wedbush’s expectations.

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