By Senad Karaahmetovic
A Daiwa Capital Markets analyst upgraded shares of PayPal (NASDAQ:PYPL) to Outperform from Neutral to reflect positive signs of change.
On the other hand, the analyst cut ratings on Mastercard (NYSE:MA) and Visa (NYSE:V) on the back of the “reduced scope to surpass market expectations” and despite upbeat earnings.
On PYPL shares, the analyst took note of a number of positive catalysts that are “falling into place”, such as cost cuts and a share buyback plan. The analyst hiked the price target to $116 from $85.
“While visibility for the operating environment remains murky, the significant deterioration of the firm’s earnings prospects since last year seems to have played out… We upgrade to an Outperform stance as we see increased upside risk to the shares leading up to Investor Day.”
On the other hand, Daiwa is moving to the sidelines on V and MA. Price targets for these two companies now sit at $225 and $375, down from the prior $230 and $385, respectively.
He continues to highly rate Visa’s medium/long-term growth prospects, but “with border restrictions now almost fully lifted with the exception of some parts of Asia, we see reduced scope for earnings to surpass market expectations going forward.”
On Mastercard, Daiwa sees “a potential dearth of positive catalysts over the near term,” hence the move lower on the rating scale.