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PayPal Holdings, Inc. (PYPL), headquartered in San Jose, California, operates a technology platform enabling digital payments for merchants and consumers. Valued at $68.81 billion by market cap, the leader in digital payment solutions makes moving money, selling, and shopping simple, personalized, and secure. The company serves consumers and businesses in approximately 200 markets.
The global digital payments giant has underperformed the broader market considerably over the past year. PYPL has declined 13.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 19%. In 2024, shares of PYPL are up 6.4%, while the SPX is up 14.2% on a YTD basis.
Narrowing the focus, PYPL’s underperformance is also apparent compared to the S&P 500 Financials Sector SPDR (XLF). The exchange-traded fund has gained about 22.1% over the past year compared to PYPL’s double-digit losses for the period. Moreover, the ETF’s 14.7% gains on a YTD basis compare to the stock’s single-digit gains over the same time frame.
On Jul. 30, PYPL shares rose more than 9% after the company reported its Q2 results. Its net revenue of $7.89 billion surpassed the consensus estimates of $7.82 billion. The company’s adjusted EPS came in at $1.19, beating Wall Street expectations of $0.96. PYPL’s payment volume grew 11% year over year to $417 billion, and operating income rose 17% year over year to $1.3 billion. It raised its 2024 profit forecast to low-to-mid teens from the previous forecast of mid-to-high-single-digit growth.
For the current fiscal year, ending in December, analysts expect PYPL to report an EPS growth of 16.7% to $4.41 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 40 analysts covering PYPL stock, the consensus rating is a “Moderate Buy.” That’s based on 15 “Strong Buy” ratings, three “Moderate Buys,” and 22 “Holds.”
This configuration is slightly more bullish than three months ago, with 13 suggesting a “Strong Buy.”
The mean price target of $74.58 represents a 14.2% premium to PYPL’s current price levels. The Street-high price target of $95 suggests an ambitious upside potential of 45.5%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
