BMO Capital analyst James Fotheringham upgraded PayPal Holdings Inc (NASDAQ: PYPL) to Outperform from Market Perform with a price target of 4, down from $278. The price target implies an 18.8% 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% 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 (NASDAQ: NVEI) and Global Payments Inc (NYSE: GPN) as GARP-oriented opportunities.
Fotheringham recommends Mastercard Inc (NYSE: MA) and Visa Inc (NYSE: V) as core holdings.
Price Action: PYPL shares traded higher by 1.92% at $192.20 in the premarket session on the last check Monday.
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