PayPal (PYPL) has set '"ambitious" growth targets that could make it harder for investors to see potential outperformance, Morgan Stanley said in a Wednesday note.
The company targets high-single-digit transaction margin dollar growth by 2027 and 10% or more in the long term, with Branded Checkout growth expected to accelerate over time.
PayPal also aims for adjusted EPS growth in the low double digits by 2027 and 20% in the long term, though Morgan Stanley notes this could set a high bar for consistent outperformance.
The firm, however, is watchful of multiple factors that could affect this acceleration, including the rollout speed of modern integrations and the volatility of Buy Now, Pay Later adoption.
The firm is also somewhat cautious about PayPal's ability to sustain Branded growth if consumers continue to face inconsistent checkout experiences, particularly as competitors like Apple Pay expand their market share.
On a positive note, the firm said it is reassured by PayPal's focus on Venmo monetization, with a goal to generate $2 billion in revenue from the app by 2027. However, the firm noted that a quicker expansion of Pay With Venmo could help ensure the company meets that target.
Morgan Stanley raised the price target for PayPal stock to $80 from $79, with an equal-weight rating.
Price: 73.00, Change: -1.07, Percent Change: -1.44
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