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Fly News Breaks for October 11, 2017
Oct 11, 2017 | 09:22 EDT
Credit Suisse analyst Michael Nemeroff notes that quarterly PC shipment data called out strength in Business PC demand driven by Windows 10 upgrades, and are consistent with the proprietary data he previously published that indicated 48% of enterprises plan to upgrade to Windows 10 within the next 12-24 months. The analyst expects continued strong growth in Microsoft's Office 365 Commercial products over the next few years, but over time he estimates that Windows-related revenue will decline as a percent of its business, giving way to a large and stable recurring revenue stream and strong cash flows. He reiterates an Outperform rating and $84 price target on the shares.
News For MSFT From the Last 2 Days
Oct 19, 2017 | 12:15 EDT
PayPal (PYPL) is scheduled to report results of its third fiscal quarter after market close on October 19, with a conference call scheduled for 5:00 pm EDT. What to watch for: 1. OUTLOOK: During the company's last earnings call, PayPal said it sees 2017 earnings per share between $1.80-$1.84, and 2017 revenue between $12.775B-$12.875B. The company also said it foresees third quarter earnings per share of 42c-44c, and revenue of $3.14B-$3.19B. 2. VENMO POTENTIAL: Last month, KeyBanc analyst Josh Beck raised his price target for PayPal to $70 from $66 saying his proprietary Key First Look debit/credit card database suggests Venmo is more incremental than cannibalistic, generally better than market expectations. On October 3, Deutsche Bank analyst Bryan Keane also raised his price target for PayPal shares to $77, citing the company's Venmo monetization opportunity that could help push PayPal's mid-term guidance of 16%-17% revenue growth and stable to slightly expanding operating margins higher. Venmo offers "exciting" potential avenues to accelerate revenue growth, relieve take rate pressure and drive higher operating margins, the analyst contended. Meanwhile, Stephens analyst Brett Huff also increased his price target on the shares to $73 from $65 after PayPal said Venmo mobile payments were now accepted at greater than 2M merchants. The analyst, who thinks this is a better-than-expected-start for the long-anticipated Venmo monetization, reiterated an Overweight rating on the stock. 3. UPSIDE AHEAD: On August 21, Craig-Hallum analyst Brad Berning argued in a research note that PayPal and Vantiv (VNTV) are both winning market share within the global secular growth of payments converting to digital from cash and check, and could be $100 stocks by 2020. A few days later, Barron's said that despite the rise in PayPal's shares, the stock still had upside as innovations could lift it another 16%. Earlier this month, Morgan Stanley analyst James Faucette was also bullish on PayPal, upgrading the stock to Overweight as he believes the company is among the few large entities that can deliver high-teens revenue and 20% EPS growth. Meanwhile, Nomura Instinet analyst Bill Carcache raised his price target for PayPal to $75 saying PayPal deserves to trade at 30-times earnings, or three-turn premium to other payment networks. The company is "uniquely positioned" to gain market share as payment network volumes continue their shift from physical to digital channels, Carcache contended. 4. POTENTIAL M&A: On September 27, Bernstein analyst Lisa Ellis told investors that she believes PayPal will likely make a strategic acquisition in the coming months. While there are a number of potential candidates, the analyst sees the acquisition of a European payments asset as the most likely. On the flip side, Ellis argued that it is unlikely PayPal would be acquired as few players can afford over $75B, and PayPal is likely more valuable independent than owned by those that could. 5. PARTNERSHIPS: On August 2, Microsoft's (MSFT) Skype said in a blog post that it has "developed Send Money, a Skype feature that allows you to transfer funds via the latest Skype mobile app while you're in the middle of a conversation using PayPal." A day later, Mastercard (MA) and PayPal also announced an extension of their partnership into Asia and earlier this month, an expansion of their partnership into Canada, Europe, Latin America and the Caribbean and the Middle East and Africa.
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