Wolfe says PayPal takeout multiple may be ‘few turns higher’ than current value

After Bloomberg reported that PayPal (PYPL) is attracting takeover interest from potential buyers, Wolfe Research argued that a takeout multiple “could be at a few turns higher” than the company’s current valuation. Discussing a rationale for a deal, the analyst sees four potential classes of buyers: large e-commerce acquirers looking to acquire PayPal’s scaled two-sided ecosystem and cross-sell tech and value-added services offerings into the merchant base; predominantly physical merchant acquirers looking to gain an e-commerce presence; tech platforms with large consumer networks looking to bring payments in-house; and financial sponsors. The firm has a Peer Perform rating on PayPal shares.