By Sam Boughedda
PayPal (NASDAQ:PYPL) was reiterated with a $129 price target and an Overweight rating by a Morgan Stanley analyst on Wednesday.
The analyst was positive on PayPal but said they think e-commerce growth probably needs to normalize before investors can turn positive on the stock.
"But data from our proprietary acceptance tracker supports our view that PYPL's wide acceptance lead and growing merchant share (especially among large sellers) can help it keep growing faster than ecomm," wrote the analyst. "PYPL can continue its outperformance vs. the market... Ecomm growth continued its slow pace in 2Q, though we still think PYPL can grow above the rate of overall e-commerce as it takes share on its wide acceptance lead, growing merchant count, increasing consumers/user engagement and investments in checkout."
However, the analyst emphasized patience, stating investors will need to see e-commerce growth accelerate to a low-teens pre-Covid level of growth before they can regain confidence in PayPal's stock.
The Morgan Stanley interest team anticipates e-commerce expanding 8% in 2022 and 10% in 2023, with PayPal revenues estimated to grow 200 to 300 bps above that.
PayPal shares have gained 2.8% so far in Wednesday's session.