Analysts: Freestanding PayPal To Face Ferocious Competition
PayPal's pending spin-off as a stand-alone company will leave it faced with an increasingly competitive landscape for online payment services, according to an analyst who maintained a Hold rating Tuesday on parent company eBay Inc (NASDAQ: EBAY).
Amazon.com, Inc.'s (NASDAQ: AMZN) recent launch into the payments field along with the imminent entry of Apple Inc. (NASDAQ: AAPL) likely drove the spin-off announcement Tuesday to a greater degree than the widely reported wishes of activist shareholders, according to Topeka's Victor Anthony.
And if those two Internet giants weren't enough competition for PayPal, Facebook Inc recently hired PayPal chief David Marcus to run its Messenger unit.
Pundits have suggested that Marcus' move prefigures an effort by Facebook to re-enter the payments field. Its earlier Facebook Credits proved unsuccessful and was shut down in 2012.
Anthony's said he "continues to see a rising competitive landscape for PayPal" although he raised his target on eBay to $59 from $54.
Deutsche Bank's Ross Sandler also maintained a Hold on eBay and hiked his target to $57 from $55. Sandler values PayPal at $29 per share and $28 for eBay.
"What would get us more bullish is proof of improving fundamentals for PayPal," Sandler said.
FBN's Shebly Seyrafi said the separation allows Wall Street to invest more directly in the faster-growing PayPal segment of what currently constitutes eBay.
With PayPal volume not tied to eBay, transactions has grown to 71 percent of PayPal revenue, from about 50 percent a year earlier, "the dependencies have loosened over the years," Seyrafi said.
Nonetheless ,Seyrafi maintained a Sector Perform rating on eBay, while boosting his price target to $65, from $60.
Latest Ratings for EBAY
Oct 2014 | JP Morgan | Downgrades | Overweight | Neutral |
Oct 2014 | Jefferies | Downgrades | Buy | Neutral |
Oct 2014 | Wedbush | Downgrades | Outperform | Neutral |
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