Atlantic Equities moves to sidelines on PayPal amid competition concerns
Justin Sullivan

Atlantic Equities on Tuesday downgraded PayPal (NASDAQ:PYPL) to Neutral from Overweight, given ongoing concerns about competition and transaction margins.
"We previously expected topline growth stabilization, resilient earnings growth and below-market valuation to enable PYPL's stock to outperform, but these factors have been more than offset by ongoing competition concerns," said analyst Kunaal Malde.
"There look to be no quick fixes to PYPL's branded market share or transaction margins, making it tough to see what actions will reignite investor interest in the stock near-term, even from new leadership, so we move to the sidelines," he added.
While Malde remains confident that near-term earnings estimates are achievable, the contribution from cost cuts to EPS growth will soon start moderating, putting more reliance on gross profit growth, which faces ongoing challenges.
He said PayPal's (PYPL) valuation is undemanding, but could remain rangebound amid competitive headwinds.
Price target was reduced to $72, implying 13% potential upside to PYPL's last close. The stock dipped 0.6% in morning trade on Tuesday.

While sell-side ratings are largely bullish on PayPal (PYPL), SA Quant rates the stock Hold.
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