PayPal (PYPL US) finally enjoyed a bounce in its shares this week while we expect more to play out after the company announced $US900mn in savings from cost-cutting, a huge $US15bn share buy-back and news that activist investor Elliot had taken a $2bn stake in the company with plans afoot to turn around the payments provider. “Elliott strongly believes in the value proposition at PayPal,” + “PayPal has an unmatched and industry-leading footprint across its payments businesses and a right to win over the near- and long-term.” You may recall that Elliot was the activist investor that called for changes at BHP which have ultimately played out unlocking value for shareholders.
We now believe the worst is behind PYPL and our initial target is ~$US120, or 30% higher from current levels.
MM is bullish PYPL from ~US$90, initially targeting $US120
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