PayPal Holdings Inc
The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.
Piper Sandler On PayPal Holdings
Analyst Kevin Barker maintained a Neutral rating while reducing the price target from $66 to $62.
PayPal reported "an operating beat this quarter, with total payment volume (TPV) and transaction take rate ahead of expectations, Barker said in a note.
"TPV growth of 15% was driven by continued momentum internationally and within the unbranded product (continuing previous trends)," the analyst wrote. "However, guidance for minimal EPS growth in 2024 implies EPS estimates need to decline ~7% as revenue growth headwinds emerge in 1Q24," he added.
BofA Securities On PayPal Holdings
Analyst Jason Kupferberg reiterated a Neutral rating while lowering the price target from $66 to $64.
PayPal delivered a "solid" quarter, with upside in TPV, revenues and adjusted earnings, Kupferberg said.
He added, however, that the 2024 guidance of flat year-over-year transaction margin dollars and adjusted earnings was "disappointing."
"This along with a light 1Q outlook plus slowing branded TPV in 4Q likely explain the negative after-hours stock reaction," he noted.
Goldman Sachs On PayPal Holdings
Analyst Michael Ng reaffirmed a Buy rating and price target of $74.
PayPal's first-quarter and 2024 guidance missed expectations, "including EPS of $5.10 (flat yoy), +MSD% branded checkout TPV growth, flattish transaction margin dollars, and +LSD% growth in non-transaction opex," Ng wrote.
"2024E is a transition year where PYPL is investing cost savings into product and consumer marketing, and rationalizing non-core business-lines and initiatives," the analyst stated.
JPMorgan On PayPal Holdings
Analyst Tien-tsin Huang maintained an Overweight rating, while reducing the price target from $75 to $70.
PayPal reported strong fourth-quarter results, "with mid-single digit Branded volume growth (in-line with broader expectations) and flat Transaction Margin Dollar growth, a better sequential improvement than we were expecting, supporting revenue and adj. EPS ahead of guidance," Huang said.
Management "set a low bar" for 2024, "stopping short of providing a year-ahead revenue outlook and expecting flat TM Dollar growth, beneath our below-consensus expectation (+3%)," the analyst wrote. "It's clear that 2024 will be more of a transition year than we were expecting, with previously targeted operating leverage coming after 2024," he added.
Wedbush On PayPal Holdings
Analyst Moshe Katri maintained an Outperform rating and price target of $85.
PayPal reported better-than-expected results for the fourth quarter and 2023, while providing "subdued" guidance for 2024, "as the company's leadership team plans to reinvest the cost-savings generated from the various cost-driven initiatives into innovation as it intends to reshape Paypal's competitive positioning," Katri said in a note.
"While CY24's guidance (flat YOY CEPS) isn't ideal, we were encouraged by some of the actions already undertaken by management," he added.
Oppenheimer On PayPal Holdings
Analyst Dominick Gabriele reiterated a Perform rating on the stock.
The company's 2024 guidance "is likely shocking many investors," Gabriele said. "We have been worried about the expense cuts baked into consensus 2024FYE," he added.
While saying that reinvestment is "needed to stay competitive," the analyst stated that it is possible for PayPal's adjusted operating margin to contract by as much as around 3% in 2024. "Continued pressure on yields is likely to continue and thus profitability stabilization timing hard to identify," he added.
KeyBanc Capital Markets On PayPal Holdings
Analyst Alex Markgraff reaffirmed a Sector Weight rating on the stock.
PayPal reported fourth-quarter revenue and non-GAAP EPS higher than the Street expectations, by 2% and 9%, respectively, Markgraff said. "Transaction margin (key metric) came in a touch ahead of the Street and operating income ahead," he added.
"The guide does not include a material benefit from recent product announcements, reflects a lower rate environment in 2H24, and consistent consumer spending," the analyst further wrote.
Needham On PayPal Holdings
Analyst Mayank Tandon maintained a Hold rating.
"The below-consensus FY24 guide calls for flat EPS as the new management team is focusing on investing in newer payments products to position PYPL for LT success given increasing competitive pressures," Tandon wrote in a note.
"While we view this decision as prudent, we expect it to take several quarters (if not years) for these investments to pay dividends in terms of re-accelerating the top-line and driving improved margins," he added.
PYPL Price Action: Shares of PayPal Holdings had declined by 11.59% to $55.91 at the time of publication on Thursday.
