A senior Mizuho analyst maintained an outperform rating for PayPal’s stock after the company announced that Dutch payments firm Adyen would offer Fastlane, a popular checkout tool that PayPal provides to its enterprise and marketplace customers in the U.S.
The Fastlane product must be strong, as evidenced by the willingness of Adyen—a direct competitor to PayPal-owned Braintree—to agree to the partnership, wrote Dan Dolev, a senior analyst in fintech equity research at Mizuho Securities USA, in an Aug. 20 research note. Dolev has previously said that Fastlane’s total addressable market could be $3 trillion, of which $1.43 trillion is realistically addressable, according to a May 30 note.
News of the partnership caused PayPal’s stock to reach its highest closing price, $71.89, on Tuesday. On Wednesday, shares ended at $71.46, off 43 cents.
In April, Stripe announced a shift in strategy, saying it would unbundle its payment services from its other financial offerings. Removing payments from Stripe’s broader suite of financial products would make their products more accessible to merchants, FinTech Magazine said. Dolev told Fortune that he thinks PayPal will also unbundle. “Everyone adores Stripe. Why shouldn’t they adore PayPal? They do the same exact thing,” he said.
Such a move should drive wider adoption of Fastlane, Dolev said in the Aug. 20 note. “We see the potential for $1 billion to $1.5 billion transaction margin dollar lift [5%–10% upside],” Dolev wrote. He also reiterated his outperform rating for PayPal and a $90 price target.
In January, PayPal unveiled Fastlane, a guest checkout function that it said would help merchants make shopping online quicker and easier. Many consumers opt not to save their credit card information with merchants, typically using guest checkout to shop. This can lead to lost sales because guest checkout can be slow and cumbersome. Instead of saving their credit card information and shipping address with a merchant, consumers save it with Fastlane once. The next time they make a purchase Fastlane will automatically prefill their information, saving time for the consumer. PayPal officially launched Fastlane in early August.
PayPal and Adyen have partnered for a number of years with Adyen customers having access to PayPal, Venmo, and PayPal’s buy-now, pay-later (BNPL) solutions. The two companies expanded the relationship on Aug. 20 and Adyen is now able to offer Fastlane to speed guest checkout for its enterprise and marketplace customers in the U.S.
“Investors should start thinking about PYPL as a platform for all-things payments versus the myopic narrow view of just branded checkout,” Dolev said.
