11:43 AM EDT, 03/21/2024 (MT Newswires) -- PayPal Holdings' ( PYPL ) potential for modest upside from new initiatives and conservative fiscal 2024 guidance suggests a favorable risk to reward scenario for the company at current valuation levels, RBC Capital Markets said in a note.

The management's strategy focuses on the value proposition of its products, which has fallen behind the competition in recent years, according to the note.

Competitive pressures from Apple's (AAPL) Apple Pay pose challenges to PayPal's ( PYPL ) mobile offering while monetization opportunities in digital wallets are underutilized, RBC added.

The firm said PayPal's ( PYPL ) unbranded offerings require unique features to enhance value, attract international and small and medium business merchants, and add services to counter shrinking margins from large merchants and card transactions.

PayPal ( PYPL ) has intensified technology and development investment with a refined focus and has streamlined spending, particularly in non-transactional operational expenses, resulting in accelerated product delivery and increased transaction volume, RBC said.

The investment firm expects PayPal ( PYPL ) to drive additional total payment volume growth by streamlining branded checkout, enhancing value proposition and transaction margin for unbranded offerings, and increasing engagement in digital wallets.

RBC had outperform rating on PayPal's ( PYPL ) stock with a price target of $74.

The company shares were up 2.8% in recent trading.

Price: 66.88, Change: +1.82, Percent Change: +2.81