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UBS analysts reiterated a Buy rating on PayPal (NASDAQ:PYPL) shares after Apple (NASDAQ:AAPL) announced the launch of its buy now, pay later (BNPL) product, Apple Pay Later.
The Cupertino-based tech titan said that its users can apply for Apple Pay Later loans of $50 to $1,000, which can be used for online and in-app purchases made on iPhone and iPad with merchants that accept Apple Pay.
Still, the analysts highlighted 3 key reasons why PayPal’s offering still has an advantage.
1) A superior consumer loan approval rate;
2) PayPal can leverage its large network of 35 million merchant relationships to promote its BNPL product, and
3) Has a more comprehensive product suite.
“PayPal remains our top large cap value pick and we reiterate our Buy rating. Over the next 3 years, we estimate that PayPal could generate a low-double digit top-line CAGR and a high-teens EPS CAGR. PayPal trades at ~13x our ’24E EPS,” they wrote in a note to clients.
