Option Trade 
Paypal Holdings Inc (NASDAQ:PYPL) Calls 
Wednesday, 12th October, 2016

** OPTION TRADE: Buy the PYPL JAN 20 2017 40.000 call at approximately $2.00. Place a pre-determined sell at $4.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.80.            

by Ian Harvey

October 12, 2016

Paypal Holdings Inc (NASDAQ: PYPL), a technology platform company, which enables digital and mobile payments on behalf of consumers and merchants around the world, is set to deliver third-quarter earnings on October 20th. Ahead of the print, analysts remain bullish on the online payment giant with optimism that the print will prove positive for shares, anticipating “solid” results.

It is likely PayPal’s medium-term guidance will see a boost on the heels of both on core business trends coupled with Visa Inc (NYSE:V) and Mastercard Inc (NYSE; MA) partnerships, contending, Last quarter, PYPL declined to address potential impacts of the Visa partnership on medium-term guidance, as the MA partnership had not yet been announced. On the 3Q call, it is believed that the financial implications of the partnerships will be addressed.

Jefferies analyst, Jason Kupferberg, is very bullish, and as such, reiterates a Buy rating on PYPL with a price target of $48, which represents just under a 22% increase from where the shares last closed.

The analyst expresses, “Our latest deep dive into the competitive landscape concludes that PYPL’s first mover advantage, investments in innovation, and sticky consumer/merchant relationships will prevent ‘disruption’.”

Ultimately, “Don’t confuse competition with ‘disruption’; PYPL still the best way to play digital/online payments. As expected, Apple Pay is now live in-browser, and we don’t expect a noticeable impact on PYPL’s business, as there is simply no compelling reason for existing PYPL users to switch,” Kupferberg concludes, believing even amid competition, considering the giant’s “differentiated social media integration and loyal/growing user base,” Paypal remains in a stellar position.

Paypal Holdings has a market capitalization of $46.26 billion, a P/E ratio of 35.58 and a beta of 1.09. Paypal Holdings has a 12 month low of $30.52 and a 12 month high of $41.75. The firm’s 50 day moving average price is $39.23 and its 200 day moving average price is $38.44.

Analyst Input

Paypal Holdings Inc. had its price target boosted by analysts at Deutsche Bank AG from $44.00 to $54.00 in a research report issued to clients and investors on Tuesday. The brokerage currently has a “buy” rating on the stock. Deutsche Bank AG’s price target points to a potential upside of 35.47% from the stocks previous close.

Also, several other equities research analysts have recently commented on the company.

Oppenheimer Holdings Inc. started coverage on Paypal Holdings in a research report on Thursday, June 16th. They issued an “outperform” rating and a $42.00 price target on the stock.

Credit Agricole SA restated an “underperform” rating and issued a $38.00 price target on shares of Paypal Holdings in a research report on Wednesday, June 29th.

Finally, Jefferies Group reiterated a “buy” rating on shares of Paypal Holdings in a research report on Tuesday, July 5th.

Four investment analysts have rated the stock with a sell rating, fifteen have assigned a hold rating and twenty-one have assigned a buy rating to the company. The consensus price target stands at $44.50, marking a nearly 13% upside from where the stock is currently trading.

 Harvey’s Options Volatility Indicator


Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the PYPL JAN 20 2017 40.000 call at approximately $2.00. Place a pre-determined sell at $4.00.

Note: No protective stop losses added -- but if you wish to do so make it $0.80.

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