This company was recently spun-off from eBay, and many on Wall Street think the real growth is in the payment segment. PayPal Holdings Inc. (NASDAQ: PYPL) operates as a technology platform company that enables digital and mobile payments on behalf of consumers and merchants worldwide. It enables businesses of various sizes to accept payments from merchant websites, mobile devices and applications, as well as at offline retail locations through a range of payment solutions across company’s payments platform, including PayPal, PayPal Credit, Venmo and Braintree products.
The company’s platform allows customers to pay and get paid, withdraw funds to their bank accounts and hold balances in their PayPal accounts in various currencies. PayPal has also been considered a potential gem property to own, or it may continue to be a large acquirer of other companies.
The Jefferies team thinks that revenue growth of 16% over the next five years is possible and the scarcity value, or lack of competition, could help drive the multiple for the company. The analysts also pointed to the new acquisitions PayPal has made, like Venmo and Paydiant, that are leveragable with the combination of Paydiant. They also think that the eBay separation is likely to help the company’s positioning with large merchants.
Jefferies has a large $44 price target. The consensus price objective is $43.44. The stock closed on Friday at $33.55.
Western Alliance Bancorp.
The Jefferies team likes this top small-cap bank. Western Alliance Bancorp. (NYSE: WAL) is one of the fastest-growing bank holding companies in the United States. Its primary subsidiary, Western Alliance Bank, is the go-to bank for business and succeeds with local teams of experienced bankers who deliver superior, personalized services and a full spectrum of deposit, lending, treasury management and online banking products and services.
Western Alliance Bank operates full-service banking divisions: Alliance Bank of Arizona, Bank of Nevada, Bridge Bank, First Independent Bank and Torrey Pines Bank.
The Jefferies team says that, despite slower than expected loan growth, the bridge loan business is good, and they think the company’s access to booming Silicon Valley is a big positive. Despite a soft second-quarter earnings report, company management is comfortable with current guidance and net interest margin is expected to rise regardless of any action taken by the Fed.
The Jefferies price target is $40, and the consensus target is $36.56. The shares closed on Friday $31.53.
While Jefferies thinks the Fed waits until December to raise rates, there is always a chance it will happen this week. While the initial market reaction may be negative, getting this initial lift-off move out of the way could be very positive for the market through the rest of the year.