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Opinions Stockchase Insights
PayPal Holdings Inc.PYPLBUY ON WEAKNESSFeb 10, 2023
Stockchase InsightsStock price when the opinion was issued
As of Jun 18, 2026. Market Open.
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Premium contentAs sector e-commerce sales have returned to pre-pandemic levels, we reiterate this online payment fintech as a TOP PICK PICK. It trades 18x earnings, supports a ROE of 18%, and trades at 3.4x book. We like that quarterly cash reserves are growing, while shares are bought back. We recommend trailing up the stop (from $50) to $53, looking to achieve $74 -- upside potential of 20%. Yield 0%
(Analysts’ price target is $74.82)
He's been bearish this all year until recently. Could be potential. It has 428 million active users, 35 millions merchants and annual payments are $1.5 trillion. Enormous. Bad news is there's a lot of competition: Apple Pay, Google Pay, Shopify. That's why shares have been down and trading half the PE of its peers. Is down 14% this year. There's a new CEO with a good track record; he will shrink the cost base and find more revenue.
Premium contentHe still owns a small position, less than 1%. Leader in transaction and payment processing. Venmo has taken off extremely well in Europe, not as much traction in NA. Reporting has been great, new CEO. Good runway.
(Analysts’ price target is $85.00)
Kim Bolton
Shares have come down a lot to 11x forward PE. The payments space is risky, and PYPL has lost market share. They have Venmo, are on Amazon as payment system, generate free cash flow, and new managers are oriented to profitability.
(Analysts’ price target is $76.12)
John ZechnerPremium contentRecently reported earnings beat analyst expectations. If the small business segment of customers, their bread and butter, can show improvement going forward there is great upside. It trades at 15x earnings, under 3x book value and supports a 20% ROE. Cash reserves are stable, while the company aggressively buys back shares. We recommend a stop-loss at $37, looking to achieve $76 -- upside potential over 30%. Yield 0%
(Analysts’ price target is $76.73)
Revenue matched estimates and EPS was about 3% better ($1.24 vs $1.198).
PayPal is in the early stages of optimizing operating performance, with a margin turnaround in 3Q22 likely to lead improvement of about 125 bps in 2023.
This will be aided by slower non-transaction expense growth, which is on track to normalize to pre-pandemic levels.
Revenue growth could be faster than the mid-single-digit growth assumed in cost planning by management.
Cross-border volumes, after being impacted severely by the pandemic, could surprise on the upside, depending on the economy.
The strong growth in Braintree volumes, launch of a commerce platform (PCPP) for unbranded checkouts for small and medium businesses, conversion of existing customers to monthly active app users, and opportunities in offline payments should provide a long runway for revenue growth.
The worst is likely over for the stock, and it now looks attractively priced at 16X earnings.
The balance sheet remains very strong and cash flow generation is very solid ($6.2B last year, with $5.5B in free cash flow).
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