It's time to buy the dip on PayPal , according to Goldman Sachs. Analyst Michael Ng initiated coverage of PayPal with a buy rating, saying in a Wednesday note to clients that the stock has an "attractive valuation" after dropping more than 35% this year. "We expect PYPL to return to EPS [earning per share] growth in excess of 20% beyond 2022, which could drive a re-rating of its valuation multiple," Ng wrote. The payments company was given a 12-month target price of $144 per share. The target is nearly 19% above where shares for PayPal closed on Tuesday. A continued shift online for payments and commerce will benefit PayPal, says Goldman Sachs. Analysts expect some product initiatives around company-owned brands PayPal and Venmo will also improve the market share of both. Other issues are expected to abate, the note said. While strong consumer balance sheets and government stimulus payments helped PayPal's transaction margins, the boost is not expected to last going forward. Still, analysts expect PayPal will have some cushion following the normalization of transaction margins. "We expect this to be driven by high-teens revenue growth beyond 2022 and the corresponding operating leverage on its non-volume related opex," Ng wrote. Goldman Sachs also initiated coverage of Block with a buy rating, saying the payments company is "well positioned" to benefit from Cash App, its peer-to-peer payments platform that is expanding its financial services offerings to consumers. Block owns both Square and Cash App. Block was issued a 12-month target price of $173 per share. The target represents nearly 18% upside from where Block's shares closed on Tuesday. —CNBC's Michael Bloom contributed to this report.
Paypal CEO Dan Schulman (C) celebrates with employees during the company's re-listing on the Nasdaq in New York, July 20, 2015.
Lucas Jackson | Reuters
It's time to buy the dip on PayPal, according to Goldman Sachs.