Paypal Holdings Inc (NASDAQ:PYPL) got some good news to start off the New Year.
Analysts at Monness Crespi Hardt published an upbeat report, indicating: “We’ve wanted to turn positive on PayPal for a while.” The firm now has a $50 price target on PayPal stock, which means there is a potential 24% upside.
But this was not the only positive report. Goldman Sachs also put PayPal stock on its conviction list, along with other mega internet companies like Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN).
Why the bullishness? First of all, the holiday season was a clear example that consumers increasingly use their smartphones as wallets. According to research from Adobe Systems Incorporated (NASDAQ:ADBE), the sales came to a hefty $24 billion (from Nov. 1 to Dec. 20), representing 31% of all online retail sales. This is up from just 19% in 2014. By 2020, Business Intelligence predicts that mobile will come to 45% of the $632 billion total in e-commerce sales.
While mobile commerce is far from easy, this is a big-time opportunity for PayPal. The company has spent years developing intuitive mobile apps for streamlining the purchase process, utilizing features such as Touch ID from Apple Inc. (NASDAQ:AAPL) and Order Ahead. But PayPal stock has also been customer-focused by allowing various payment types like Visa Inc (NYSE:V) and Mastercard Inc (NYSE:MA).
What’s more, the company has leveraged its platform to provide comprehensive merchant services. In the latest quarter, the business reported a 34% jump in payments volume to $73 billion. Just some of the marquee customers include Uber, Airbnb and Pinterest.
Of course, a critical part of the strategy — which has certainly helped PayPal stock — is the savvy dealmaking. One example is the acquisition of Xoom, which allows people to easily send payments to 56 countries. It’s essentially a new-fangled version of The Western Union Company (NYSE:WU) and Moneygram International Inc (NASDAQ:MGI). Keep in mind that the market opportunity is a whopping $600 billion.