Stifel analyst Scott Devitt upgraded PayPal Holdings Inc.'s stock to "buy" from "hold" and raised its price target to $99 from $82.
The analyst pointed to the company's strategy of pursuing growth-focused mergers and acquisitions valued between $1 billion and $3 billion per year over the medium-term, as well as its recently raised guidance.
"We believe PayPal is still in the early stages of its transformation from a button/online checkout company to a global payments platform with a sizable addressable market opportunity," Devitt wrote.
The company's estimated $581 billion total payment volume represents less than 1% market share, leaving the potential for significant growth in the future, he said.
The analyst also believes Venmo is a "bright spot" for PayPal, and that the platform can expand monetization and partnership opportunities with retailers.
The analyst increased his EPS estimates for 2019 to $2.82 from $2.80. His 2018 estimate for the company's earnings is $2.35 per share.
