Benzinga | Jan 3, 2022 05:17AM EST

BMO Capital Upgrades PayPal To Outperform; Cuts Price Target By 19.4%

BMO Capital analyst James Fotheringham upgraded PayPal Holdings Inc (NASDAQ:PYPL) to Outperform from Market Perform with a price target of $224, down from $278. The price target implies an 18.8% upside.

* Fotheringham cites valuation for the upgrade following 2021's "de-rating," where the stock went down from 51x to 28x on a rolling two-year-forward price-to-earnings basis.

* Tax-loss selling is done, and investors are focused on more normalized 2023 estimates for valuation.

* Fotheringham sees 21% annual organic revenue growth potential for PayPal and believes payment stocks are "set up constructively for this year."

* Fotheringham recommends buying PayPal along with Nuvei Corp (NASDAQ:NVEI) and Global Payments Inc (NYSE:GPN) as GARP-oriented opportunities.

* Fotheringham recommends Mastercard Inc (NYSE:MA) and Visa Inc (NYSE:V) as core holdings.

* Price Action: PYPL shares traded higher by 1.92% at $192.20 in the premarket session on the last check Monday.