Several analysts raised their price target for PayPal Holdings (NASDAQ:PYPL) stock following a solid Q1 earnings beat. Even so, analysts remain divided on the stock until a clearer path to profitability is visible. PayPal is an American multinational fintech company, operating a digital payments platform. It derives most of its revenue from transaction fees, earned as a percentage of the transactions processed. In the past year, PYPL stock has lost 8.5%.
A Glimpse of PayPal’s Q1 Results
In Q1 FY24, PayPal’s revenue rose 9% year-over-year to $7.7 billion, driven by a 14% jump in total payment volume (TPV) and an 11% increase in payment transactions. What’s more, PayPal’s operating margin expanded by 98 basis points. Also, adjusted earnings per share (EPS) rose 27% year-over-year to $1.08 based on its new Non-GAAP computing methodology.
For Q2 FY24, PayPal projects a 7% (currency-neutral basis) year-over-year rise in revenue while adjusted EPS is expected to grow by a low-double-digit percentage. At the same time, for the full-year Fiscal 2024, PayPal expects adjusted EPS growth of mid to high single-digit percentage.
Wall Street’s Mixed Views on PayPal’s Future
Goldman Sachs analyst Mike Ng raised the price target to $76 (14.9% upside) from $74 while keeping a Buy rating. Ng is particularly encouraged by PayPal’s efforts to accelerate branded checkout growth by upgrading its checkout experiences. The analyst also sees operating expense discipline, expanding margins, and commitment to share buybacks as ways of improving the company’s EPS going ahead.
Similarly, JMP Securities analyst Andrew Boone boosted the price target to $82 (24% upside) from $70 and kept his Buy rating on PYPL stock. Boone is highly optimistic about PayPal’s future with the new management team in place. The analyst sees various catalysts for higher growth potential, including enabling Fastlane for U.S. users, SMB (small and medium businesses) merchant transition acceleration, and the increased usage of the PayPal app, all leading to higher active accounts and TPV growth.
Another analyst, Colin Sebastian of Robert W. Baird increased the price target to $77 (16.4% upside) from $70 and reiterated a Buy rating on PayPal. Sebastian is impressed by management’s updated guidance and its focus on accelerating the innovation of products, coupled with positive trends from testing of Fastlane in the U.S. He believes that management has given a conservative outlook and hopes to over-deliver on the same. Sebastian also views the shares as undervalued currently, with expected growth in branded checkout and the potential to stabilize margins.
Meanwhile, TD Cowen analyst Bryan Bergin lifted the price target to $68 (2.8% upside) from $58 but maintained a Hold rating on PYPL. Bergin prefers to wait on the sidelines as he thinks that the management’s execution strategy is at an early stage and could take time to realize monetizable benefits. That said, the analyst appreciates PYPL’s product innovation, cost discipline measures, and fixing of underperforming assets.
What is the Prediction for PayPal Stock?
With 16 Buys versus 20 Hold ratings, PYPL stock has a Moderate Buy consensus rating on TipRanks. The average PayPal Holdings price target of $67.69 implies 2.3% upside potential from current levels.
Ending Thoughts
Analysts have shown varying degrees of confidence in PayPal stock’s trajectory, swinging between Hold and Buys. Given the mixed views, Wall Street is cautiously optimistic about PayPal’s prospects.
