Wall Street says PayPal shares will keep surging due to its Venmo app

Key Points
  • Pacific Crest initiates its price target for PayPal at $60, representing 14 percent upside from Tuesday's close.
  • The firm raises its rating on the online payments company to overweight from sector weight.
Dan Schulman
Scott Mlyn | CNBC

Investors should buy PayPal shares as the company will report earnings above Wall Street expectations next year, according to Pacific Crest, which raised its rating on the online payments giant to overweight from sector weight.

"PayPal is moving beyond the 'investment' phase of Consumer Choice [credit card or bank account funding] and Venmo to the harvesting phase. Pricing, capital deployment, and opex improvements may become more fully appreciated as most of these opportunities are in an early stage," analyst Josh Beck wrote in a note to clients Tuesday.

PayPal owns mobile app service Venmo, which enables peer to peer money transfers and payments.

The company's shares rallied 33 percent this year through Tuesday, compared with the S&P 500's 9 percent return in that period.

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