BMO Capital analyst James Fotheringham upgraded PayPal Holdings Inc. to Outperform from Market Perform with a price target of $224, down from $278. The price target implies an 18.8 percent upside.
Fotheringham cites valuation for the upgrade following 2021’s “de-rating,” where the stock went down from 51x to 28x on a rolling two-year-forward price-to-earnings basis.
Tax-loss selling is done, and investors are focused on more normalized 2023 estimates for valuation.
Fotheringham sees 21 percent annual organic revenue growth potential for PayPal and believes payment stocks are “set up constructively for this year.”
Fotheringham recommends buying PayPal along with Nuvei Corp. and Global Payments Inc. as GARP-oriented opportunities.
Fotheringham recommends Mastercard Inc. and Visa Inc. as core holdings.
