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Why Did the S&P 500, NASDAQ, and Dow Rise to Record Highs?

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Why Did the S&P 500, NASDAQ, and Dow Rise to Record Highs? PART 3 OF 3

PayPal Reached Record Highs after Upgrade from Morgan Stanley

PayPal Holdings

PayPal Holdings (PYPL), which operates a worldwide online payments system that supports online money transfers, was one of the S&P 500’s top gainers on Wednesday. It opened higher on October 11, 2017, and rose to record high price levels.

PayPal Reached Record Highs after Upgrade from Morgan Stanley

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String of upgrades

The string of upgrades ahead of PayPal’s 3Q17 earnings report added positive momentum to the stock. The earning reports will be released next week. The analysts at Merrill Lynch upgraded PayPal citing strong “payment volume trends.” They expect the company to outperform its revenue guidance for the third quarter. The market sentiment on PayPal increased after Deutsche Bank named PayPal’s Venmo, a social payment app, as its “crown jewel.” Deutsche Bank added that Venmo will help the company speed up its revenue growth and increase its operating margins.

Morgan Stanley upgrade

On Wednesday, PayPal rose following an upgrade from Morgan Stanley. James Faucette of Morgan Stanley upgraded the stock from a yearly target of $62 to $76. In a note to his clients, Faucette said, “PayPal’s probably never going to look cheap again.” Compared to other digital paying wallets, PayPal has the advantage of a massive acceptance lead, which contributes to its strong payments volume trend.

Morgan Stanley also added that the market might be overreacting to the negative impact of PayPal’s renegotiation with eBay in 2020, which could impact PayPal’s balance sheet. On October 11, PayPal rose 2.6% and closed the day at $67.78. On the other hand, the S&P 500 Financials sector fell 0.14%.

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