Two Quick Stories

Overall, this is a rough day for the markets. As I’ve said, the scare isn’t Greece but who’s next. Once a precedent is set, then the dominos can fall.

With the PayPal spinoff coming, I have to think that it might be snapped up quickly. IBD looks at that possibility:

JPMorgan raised its price target on eBay (NASDAQ:EBAY) ahead of its spinoff of payments arm PayPal, and said a “stand-alone” eBay could be involved in M&A.

PayPal, meanwhile, has been viewed as a possible partner of Alibaba Group or a takeover target. PayPal will face stiff competition from Apple (NASDAQ:AAPL), Google (NASDAQ:GOOGL) and Samsung in mobile payments, some analysts say.

Doug Anmuth, a JPMorgan analyst, raised his eBay price target to 64 from 60.

“Some of eBay’s playbook sounds familiar, and management will now need to show that it can execute on it better than over the past few years,” said Anmuth in a research report. “But eBay also has some fallback with $1 billion to $2 billion in net cash at separation, more than $2 billion in annual free cash flow, and significant capacity to lever up and return capital if desired.”

“A stand-alone eBay also becomes more of an M&A candidate going forward, in our view,” he added.


“We currently value PayPal at a market cap of $44 billion,” Anmuth wrote, “and a post-spin share price of $36. Overall, we are encouraged by the prospects for both PayPal and eBay as stand-alone companies and investment vehicles. However, between the two we believe PayPal is better positioned in terms of the potential to drive future innovation, the competitive landscape, and overall growth opportunities.”

William Dudley, the head of the New York Fed, recently said that the Fed may increase interest rates in September:

Speaking on Friday, Mr Dudley said the data since then have made him “less worried about the labour market piece”. He declined to reveal his personal forecast for when the Fed will first lift rates, indicating it was perfectly possible the central bank will wait until December before moving.

“If we hit 2.5 per cent growth in the second quarter and it looks like the third quarter is shaping up for something similar, then I think you are on a firm enough track that you would imagine you would have made sufficient progress in our two tests [for a rate hike], certainly by the end of the year,” he said.

“It would not shock me if we decided to lift off in September, or it wouldn’t shock me if the data were a little softer and it caused us to wait.”

Posted by on June 29th, 2015 at 12:46 pm

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