PayPal Holdings Inc
The results came amid an exciting earnings season. Here are some key analyst takeaways.
Goldman Sachs On PayPal Holdings
Analyst Will Nance maintained a Neutral rating while raising the price target from $68 to $69.
PayPal reported "solid" quarterly results, "with a 7% transaction margin beat vs consensus, even after stripping out more one-off drivers, Nance said in a note. "Additionally, we believe the commentary on the back half of the year was better than expected," he added.
Management expects consistent results in Branded checkout in the back half of the year, "which we believe is a positive read (albeit setting the company up for a slightly higher bar in 2H numbers)," the analyst wrote.
The company continues to expect "profitable growth in Braintree/Unbrand, which has been a consistent theme since the mgmt change last summer, and is now supported by Unbranded volumes driving incremental net revenue growth this quarter," he further stated.
BMO Capital Markets On PayPal Holdings
Analyst Rufus Hone reaffirmed a Market Perform rating while lifting the price target from $65 to $72.
PayPal's transaction margin (TM) dollar growth accelerated to 8% year-on-year in the second quarter, Hone said. He added, however, that this was supported by "several tailwinds."
"We continue to worry that it will prove challenging for PYPL to meaningfully accelerate transaction margin (TM) dollar growth (on a sustainable basis) in the medium term," the analyst wrote.
While some of the tailwinds could persist in the near term, "we need to see greater evidence that Branded Checkout TM $ growth can accelerate significantly," he further stated.
Canaccord Genuity On PayPal Holdings
Analyst Joseph Vafi reiterated a Buy rating and price target of $80.
"PayPal's business and P&L momentum continues to build as the company's next chapter unfolds nicely under new CEO Alex Chriss and his team," Vafi wrote in a note. There is increased evidence of accelerating product traction "across the service offerings portfolio," he added.
"In particular, we are encouraged to see Braintree return to providing positive transaction margin, Venmo continuing on its monetization journey, and branded checkout benefiting from a revamped customer experience," the analyst said.
He added that there are plenty of opportunities to "drive more value from the existing offerings portfolio while also being prudent on the cost front."
JPMorgan On PayPal Holdings
Analyst Tien-tsin Huang reiterated an Overweight rating and price target of $77.
PayPal reported revenues of $7.89 billion, beating consensus of $7.82 billion, Huang said.
"TPV growth of 11% FXN missed our 12% estimate with Branded volume growing 6% FXN while PSP volume decelerated 7ppts to +19% growth," he added.
Transaction margin dollar growth accelerated to 8%, from 4% in the previous quarter, and came in higher than the Street's 1% estimate, the analyst stated. This was "driven by improvement in Braintree contribution, as well as improvement in Branded and Venmo," he further wrote.
JMP Securities On PayPal Holdings
Analyst Andrew Boone maintained a Market Outperform rating and price target of $82.
PayPal reported strong quarterly results and raised its 2024 free cash flow guidance by $1 billion to $6 billion, "as new products and greater pricing focus are driving profitable growth," Boone said.
This greater focus on profitability could lead to slower payment volume and revenue growth in the back half of the year, the transaction margin growth in the second quarter was the "fastest it has been in 10 quarters," he added.
"PayPal raised 2024 transaction margin guidance as the company transitions from pricing-led growth to product-led growth," the analyst further wrote.
KeyBanc Capital Markets On PayPal Holdings
Analyst Alex Markgraff maintained a Sector Weight rating on the stock.
PayPal's second quarter showed "execution against important product initiatives," with positive Braintree margin trends, "which helped lead transaction margin higher, among other contributors like interest income and Branded/Venmo growth," Markgraff wrote in a note.
Branded TPV growth was slightly higher than expected, although a further acceleration in needed to "instill confidence in the road to share gain," the analyst stated.
"FY24 commentary/guidance implies a step down in TPV/revenue growth in 2H24, but positive revisions to transaction profit/non-GAAP EPS growth," he added.
PYPL Price Action: Shares of PayPal Holdings had risen by 3.52% to $66.26 at the time of publication on Wednesday.
