Bernstein Sees Limited Upside for PayPal Holdings, Inc. (PYPL) at Current Levels

PayPal Holdings, Inc. (NASDAQ:PYPL) ranks among the best spring stocks to buy right now. On February 10, Bernstein SocGen Group reaffirmed a Market Perform rating on PayPal Holdings, Inc. (NASDAQ:PYPL) with a $45 price target for the company’s shares. The firm acknowledged issues with PayPal’s pricing power, claiming it is eroding as the payments giant “no longer has the same ‘bragging rights’” in terms of conversion and various other metrics compared to other payment companies.

Bernstein Sees Limited Upside for PayPal Holdings, Inc. (PYPL) at Current Levels

Even with these concerns, Bernstein recognized that with a 16% free cash flow yield this year, PayPal’s valuation likely reflects part of these “structural short” characteristics. The firm argued that at the current pricing, a sum-of-the-parts valuation methodology and future activist engagement are not out of the question.

Although there isn’t much room for growth at the current price, Bernstein said a stock price of $30 to $35 would result in a sum-of-the-parts valuation that would make potential Braintree and Venmo spin-offs “increasingly attractive.”

PayPal Holdings, Inc. (NASDAQ:PYPL), based in San Jose, California, operates a technology platform that enables digital payments for merchants and customers worldwide. The company provides payment services under several brands, including PayPal, Credit, Braintree, Venmo, Xoom, and Zettle.

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