Here's How PayPal Shares Can Hit $63

BTIG analyst Mark Palmer sees growth ahead for Paypal Holdings Inc (NASDAQ: PYPL), reiterating a Buy rating with a price target raised from $53 to $63.

“We believe [PayPal] represents the most direct means by which investors can participate in the growth of mobile payments and e-commerce,” said Palmer in a note.

The analyst agrees with PayPal’s business model of growing transaction volumes before take rates and sees the company doing so via two avenues.

One Touch, Many Transactions

The number of transactions per active PayPal user increased from 28 in the first quarter of fiscal 2016 to 32 in Q1 fiscal 2017.

The increase can be attributed in part to the development of One Touch, which allows users to make payments without needed to re-enter their account information. Increased adoption among customers is expected to make PayPal an “integral part of its customers’ daily lives,” said Palmer.

Management noted One Touch has taken hold faster than any other product in the company’s history and will continue to drive rapid adoption growth.

Additionally, the analyst was confident that expanded partnerships with Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) and Facebook Inc (NASDAQ: FB) are underappreciated.

Accretion From Acquisitions

Palmer believes PayPal’s acquisitions of other mobile payment platforms — including Braintree, Venmo and Xoom — will provide a significant source of upside, keeping the company in line to meet or exceed its three-year guidance.

In particular, the monetization of Venmo will provide strong growth. Venmo was the first mobile payment app to gain serious traction with millennials, who make up the majority of mobile payment users, a fact Palmer believes investors are undervaluing.

Venmo is also rumored to be launching a debit card, which can charge merchant fees, thereby creating a new stream of revenue.

For consumers, a Venmo debit card would allow holders to use funds stashed in Venmo at any store without having to wait for it to transfer to their bank account.

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