PayPal (PYPL) is drawing support from both Wall Street analysts and retail investors following the reported $53.4-billion takeover bid from Stripe and Advent International. Both groups say the $60.50-per-share offer undervalues the payments company.
Shares of PYPL gained nearly 4% on Thursday after the stock logged its on July 15 following reports of the potential take-private deal.
At the time of writing on Thursday afternoon, had pared some of their gains but remained up 3%.
PYPL Is Worth $70 A Share, Says Cantor Fitzgerald
Cantor Fitzgerald analyst Ramsey El-Assal said a sum-of-the-parts analysis suggests a $70 per share offer would better reflect the company's intrinsic value, according to TheFly. While maintaining a ‘Neutral’ rating and a $54 price target, the firm said the reported valuation is likely an opening bid rather than a final proposal. Cantor Fitzgerald’s price target implies a downside of nearly 3% from the stock’s Wednesday close.
Canaccord Says $60-$61 Takeout Price Is Too Low
Canaccord analyst Joseph Vafi raised the firm's price target to $55 from $42 and maintained a ‘Hold’ rating. The firm said a $60-$61 takeout price appears too low, particularly with both financial and strategic buyers involved. The firm added that PayPal's board is likely focused on operational improvements under its new CEO rather than strategic alternatives, according to TheFly. Cantor Fitzgerald’s price target implies a downside of nearly 1% from the stock’s last close.
Clear Street Sees Hidden Value In PayPal
Clear Street initiated coverage of PayPal with a ‘Hold’ rating and a $61 price target, implying an upside of nearly 10% from its last close. The firm described the company as being at a “strategic crossroads,” with hidden value obscured by its complex organizational structure. The firm said the company’s restructuring gives management another opportunity to unlock that value.
Barclays also upgraded PayPal to ‘Equal Weight’ from ‘Underweight’ with a $55 price target.
The $53B Takeover Bid
Stripe and Advent International made a joint $53.4 billion cash offer, or $60.50 per share, for PayPal on July 15, according to CNBC. Stripe, Advent and Block are reportedly contributing $17 billion in equity toward the transaction, while the bid is backed by roughly $50 billion in committed bank financing. PayPal’s board is expected to meet as soon as July 20 to discuss the proposal.
PYPL Stock: Retail Traders Expect A Higher Bid
On Stocktwits, retail sentiment toward PayPal was ‘extremely bullish,’ while message volume was ‘extremely high’ at the time of writing.
Many traders dismissed the reported offer as too low for a high-cash-flow fintech company.
One retail trader that the bid significantly undervalues PayPal, saying that “anything under $80 is a scam.”
View this Stocktwits postAnother bullish trader described the “$60.50/share” offer as “just the beginning of negotiations,” adding that it would “easily get bid up to $75.”
View this Stocktwits postOne more retail trader said, “any price below $100 is a steal,” and added that Stripe wants PayPal “because they know that.”
View this Stocktwits postPYPL shares have declined around 4% year-to-date.