PayPal, Visa Could Be In Talks About A Possible Partnership: Analyst

By | April 13, 2016

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PayPal ( PYPL )and Visa ( V ) apparently are in talks about a possible partnership, but whether the companies can reach an agreement remains to be seen, investment bank SunTrust said Wednesday. At the moment, PayPal attempts to push its customers into using cheap funding sources such as direct access to bank accounts and funds stored in PayPal accounts. But, should the company strike a deal with Visa (or MasterCard ( MA )) and present credit cards as an equal option, the company would likely see a $300 million transaction-expense increase, SunTrust analyst Robert Peck wrote in a research note. To offset the increased expense, Peck says PayPal would have to either negotiate for some kind of expense offset, see a 7% lift in payment volume funded by credit cards, or see a 3% lift in volume from its cheapest funding sources. San Jose, Calif.-based PayPal, through a spokesperson, declined to comment. PayPal stock was up about 2%, below 39, in afternoon trading on the stock market today . PayPal found support at its 50-day moving average Wednesday, a positive move just when the stock needed one. The stock is still below a buy point at 40.03 but above a 38.62 entry. The company has an IBD Composite Rating of 91, where 99 is the highest, putting it among the top 9% of all stocks on key metrics such as earnings and sales growth. In his research note, Peck upped his price target on PayPal stock to 44 from 38, citing better market conditions. Peck maintained a buy rating on the stock. Peck says that there are “breadcrumbs” that indicate a solid Q1 for the company. PayPal is set to report results April 27 after the close . Last week, e-commerce leader  Amazon.com ( AMZN ) announced new features for its languishing payments platform that take aim at PayPal, and rivals such as Square ( SQ ). Scalper1 News

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