UBS analyst Eric Wasserstrom downgraded PayPal Holdings (PYPL) to Neutral from Buy while raising his price target for the shares to $120 from $101.

The stock closed yesterday up 6c to $108.20.

The analyst's analysis of PayPal's core operations indicates "limited beat-and-raise potential" over the next two years. Further, his "bull scenario" for Venmo monetization would only add 2% to his current 2020 earnings estimates. While Venmo maintains a leading competitive position in people-to-people payments, this competitive position will translate into "limited" revenue and net income contribution over the next two years, Wasserstrom tells investors in a research note.

In addition, the analyst sees limited valuation upside in shares of PayPal at current levels.