Goldman Sachs Starts PayPal, Block at Buy

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Goldman Sachs Starts PayPal, Block at Buy

Goldman Sachs analyst Michael Ng initiated the research coverage on PayPal (NASDAQ: PYPL ) and Block (NYSE: SQ ) with a Buy rating.

On the former, Ng forecasts EPS growth of over 20% after 2022, which should likely help PYPL shares to re-rate following massive losses suffered recently.

The EPS growth will be driven by secular tailwinds from the digitization of payments and e-commerce growth, abating headwinds after 2022 (e.g., eBay, supply chain, credit & funding normalization), and product initiatives to improve monetization & market share at Venmo and Paypal.

Ng has a $144.00 per share price target on PYPL, which signals an upside of nearly 19%.

Similarly, Ng started Block at Buy with a $173.00 per share price target.

SQ is well-positioned to benefit from Cash App's growing monetization from new product features (e.g., tax preparation, card spending, cash management, stock investing, Bitcoin) while enjoying ongoing user growth from the network effects of P2P payments, as well as Square's continued share gains within SMB acquiring. The recent acquisition of Afterpay should generate synergies and integrate the Square and Cash App ecosystems through the addition of new consumers and merchants, as well as helping to establish commerce & brand discovery features into Cash App while generating leads for merchants, the analyst wrote in a client note.

By Senad Karaahmetovic

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