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William Blair Sees Long Term Growth Potential for Paypal Holdings Inc

By Austin Angelo

On October 6th, Robert Napoli from William Blair initiated coverage on Paypal Holdings Inc. (NASDAQ:PYPL) with an Outperform rating.

According to Napoli, PayPal is “uniquely positioned” to gain from the long-term growth of electronic modes of payments. He says, given the company’s high growth rate, it deserves a premium valuation. As per the analyst, the stock presently trades at 11.5 times his 2016 estimate, which is in line with the estimates of the peer group.

Napoli currently has an overall success rate of 46% recommending stocks and a +5.2% average return per recommendation when measured over a one-year horizon and no benchmark.

PayPal started trading publicly in July 2015 after a spinoff from eBay, Inc. The separation allows PayPal to concentrate on digital payments, while also becoming a full-service payments partner for both consumers and merchants. PayPal recently acquired Xoom Corporation, a player in international money transfers. With Xoom, PayPal can sell international money transfer services to its US customer base of around 68 million.

In July, when the company had separated from eBay, Dan Schulman, President and CEO of PayPal had commented, “As the world’s open, digital payments platform and most trusted and popular digital wallet, we are excited to celebrate our listing day and embark on our next chapter.” He had added, “Mobile technology is transforming payments, making it easier, safer and more affordable for people to move and manage their money than ever before. As an independent company, we see a tremendous opportunity for PayPal to expand our role as a champion for consumers and partner to merchants, and to help shape the industry as money becomes digital at an increasingly rapid pace.”

Out of 29 analysts polled by TipRanks who have rated PayPal within the past three months, 20 are bullish on the stock, three are bearish, and six remain on the sidelines. The average 12-month price target on PayPal is $41.76, marking a 31.07% potential upside from current levels.