PayPal stock has faced some challenges in recent years. That’s why Bank of America is still increasing its price target for the stock.
• Bank of America analyst bullish on PayPal stock
• PayPal checkout button competing with Apple Pay
• BofA analyst Kupferberg raises price target
Shares of PayPal Holdings Inc. have been under significant pressure in recent years. The stock is a long way from its all-time high of $310 in July 2021. Nevertheless, Jason Kupferberg, senior analyst at Bank of America (BofA), is optimistic, according to MarketWatch. He sees potential for price increases and upgrades the stock to “buy”. This decision is based on the hope that PayPal can overcome its controversies, particularly around PayPal’s core business – the checkout button.
Future of the PayPal checkout button in danger: Will Apple Pay be the death knell?
PayPal’s checkout button, once the company’s flagship product, is used to send and receive online payments, but is increasingly facing competition, particularly from Apple Pay. According to Kupferberg, this will “probably remain the biggest controversy” for PayPal stock in the coming year. Pressure from competitors could affect Button’s growth and therefore also affect stock performance.
Analyst optimistic: growth despite crisis?
Despite these concerns, there are encouraging signs for PayPal’s future. The company has solid quarterly results and a positive near-term outlook. Regarding the checkout button, Kupferberg noted that PayPal has recently seen consistent growth of 6 percent in the brand’s total payment volume. The growth in total payment volume is directly influenced by the number of payment transactions enabled on the payment platform. “And if a combination of an easier comparison and healthy e-commerce spending over the holiday season drives even a slight improvement in this fourth-quarter metric, we believe stocks would respond positively,” Kupferberg said, according to MarketWatch.
In addition, PayPal plans to optimize the checkout button in 2025 to reduce latency and improve the user experience. These strategic initiatives could be crucial to regaining investor trust.
PayPal shares on the rise: That’s why Bank of America is betting on further potential
Analysts’ opinions are divided, but there is a clear trend: Analysts at Bank of America, with Kupferberg as team leader, have upgraded the stock from “neutral” to “buy” and increased the price target from $86 to $103, according to MarketWatch. This suggests that experts believe in PayPal’s potential – despite the existing challenges. In addition, PayPal shares have risen enormously since the end of July 2024.
In addition to improving the checkout button that PayPal is working on, the analyst also identified other potential catalysts for the company. He expects that an investor day in February 2025 and continued strong cash flow could increase interest in PayPal. The company also plans to increase its free cash flow generation and continue share buybacks.
Another interesting aspect is PayPal’s weighting among long-only investors, which is still below average. According to Kupferberg, the relative weighting is 0.57. This is an improvement from the 0.31 weighting at the start of 2024, but is still below the target equal weighting of 1.0 compared to the S&P 500 index. This suggests that the potential for positive sentiment among investors has not yet fully developed.
PayPal in the fight for investor trust
PayPal faces the challenge of increasing confidence in long-term growth prospects. The development of PayPal shares continues to be overshadowed by questions surrounding the company’s core area, the checkout button. Nevertheless, the outlook for 2025 is promising thanks to positive financial trends and PayPal’s strategic improvements. For investors, PayPal shares offer both opportunities and risks. It remains to be seen whether the company can maintain its position in the competition and how the share price will develop in the coming months.
Editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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