Analysts update investors as tech giant Apple Inc. (NASDAQ:AAPL) releases new iPhone SE to target mid-range luxury market and online payments giant PayPal Holdings Inc (NASDAQ:PYPL) undergoes meetings with payment networks, hinting at a potential partnership that could bolster the company’s position in the future.
Analyst Brian White of Drexel Hamilton reiterated a Buy rating on Apple with a target price of $200 after the company introduced a new 4-inch iPhone that can compete in the mid-range luxury market.
Following yesterday’s Apple’s highly anticipated event, the company unveiled its new iPhone SE with a starting price of $399, which is lower than analysts’ entry estimates of $400-$500. In addition to the SE, Apple lowered the price of its Apple Watch Sport, announcing a new starting price of $299 as opposed to the previous price of $349. In regards to other products, Apple announced a new 9.7 iPad Pro in addition to other improvements and updates.
All eyes were on Apple’s new 4-inch SE, which starts at $399 for 16GB and $499 for 64GB. The starting price of the SE compares to $649 for the 16GB 4.7 inch iPhone 6s; $549 for the 16GB iPhone 6; and $450 for the 16GB iPhone 5s. White believes the attractive price point for the SE could help Apple expand in developing countries, such as India, and in “Tier 3-5 cities (80-90% of China’s households) in China.” Pre-orders begin March 24 and the SE will be available in stores March 31.
White believes there is “much to look forward to from Apple” in 2016 as the company will introduce a new iPhone cycle with the iPhone 7, improve the Apple Watch, potentially increase the cash paid out to shareholders, and take advantage of new geographic opportunities for its products in India.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian White has an annual average return of 7.5% and a 51% success rate. White is ranked #189 out of 3821 analysts.
Apple is considered a Strong Buy on TipRanks as 32 analysts are bullish on the stock, 1 is bearish, and 5 are neutral. The average 12-month price target between these 38 analysts is $134.65, marking a 27% potential upside from current levels.
PayPal Holdings Inc
PayPal’s recent meetings with Visa, MasterCard, and American Express lead analysts to believe a partnership may be in the works. By making cash the common enemy, PayPal can position themselves to target the $25 trillion total addressable market. Analyst Bill Carcache of Nomura weighed in on the payment company following these meetings.
PayPal and major credit cards joining forces would make it possible for the company to be the system-sponsored digital wallet. In order to do so, Carcache believes that PayPal and the payment networks need to resolve their differences. The analyst believes PayPal will agree to stop obfuscating data because the company views itself as a payments company, as opposed to a data analytics company. Additionally, Carcache expects consumers to “retain the freedom to fund their PYPL; accounts using debit, credit, or ACH [automated clearing house], with PYPL agreeing not try to influence their choice.”
Carcache believes a deal with MasterCard, Visa, and American Express could eliminate network fee overhang, reduce terminal value risk, and increase PayPal’s volume growth outlook. If PayPal, Visa, and MasterCard partner together, Carcache writes that the companies would be able to then “focus on their $25tn addressable market instead of battling one another.” In light of these promising developments that hold a lot of potential, Carcache maintains a Buy rating on PayPal with a target price of $54, representing a potential upside of 37%.
According to TipRanks which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Bill Carcache has a yearly average return of 12.4% and a 74% success rate. Carcache is ranked #103 out of 3820 analysts.
In the past 3 months, 13 analysts have been bullish on PayPal, 1 has been bearish, and 3 remain neutral. The average 12-month price target between these 17 analysts is $41.69, marking a 1.34% upside from where shares last closed.