Analyst James Faucette from Morgan Stanley maintained a Hold rating on PayPal Holdings and keeping the price target at $75.00.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
James Faucette’s rating is based on PayPal’s recent introduction of the PayPal Ads Manager, which aims to help small businesses generate ad revenue through their web traffic. While this tool is expected to modestly support gross profit growth in the long term, its immediate impact on PayPal’s financials is anticipated to be limited. The CEO’s strategy to transform PayPal into a marketing and advertising platform is promising, leveraging its extensive transaction data to offer targeted ads. However, the revenue sharing from this initiative is not expected to significantly alter gross profit estimates in the near future, as most of the economic benefits will likely go to merchants.
Despite the potential for increased engagement with merchants through the Ads Manager, PayPal’s merchant churn is already low, and the tool is not expected to significantly boost consumer conversion rates or branded checkout growth in the short term. The existing high acceptance rate among top online merchants further indicates that while the Ads Manager adds value, it may not drastically change PayPal’s market position. Therefore, the Hold rating reflects a cautious outlook, balancing the potential long-term benefits with the anticipated limited near-term financial impact.