Here’s How Analysts View PayPal Post Q4

By Benzinga
February 2, 2022 Updated: February 2, 2022

Analysts slashed their price targets on PayPal Holdings Inc. following dismal Q4 results.

JPMorgan analyst Tien-tsin Huang lowered the price target to $190 from $272 (44.7 percent upside) and kept an Overweight.

The company’s guidance was “broadly disappointing, but probably necessary to reset expectations in order to get back to beating and raising expectations.”

The analyst cut estimates but still sees PayPal emerging “from this air pocket” with growth approaching 20 percent exiting fiscal 2022.

Morgan Stanley analyst James Faucette lowered the price target to $190 from $217 and kept an Overweight.

He thinks “modestly weaker-than-expected” results of the past couple of quarters are attributable primarily to uneven, disappointing e-commerce growth, complicated by tough year-over-year comps and supply chain disruptions.

However, Faucette thinks investors are “probably overly preoccupied” by the reduced emphasis on NNA growth and instead should focus on overall e-commerce growth.

However, he admits e-commerce market growth normalization could take several quarters to play out.

Credit Suisse analyst Timothy Chiodo lowered the price target to $190 from $250 and kept an Outperform.

The analyst notes an altered approach combined with near-term pressures results in a disappointing fiscal 2022 outlook.

The analyst adds that PayPal backed off its original five-year growth targets and now expects a slightly more pressured 2022 versus prior expectations provided on the Q3 earnings call, alongside a resumption of previous guided trends in the out years with a seemingly increased focus on profitability and engagement.

While PayPal remains a unique near pure-play e-commerce platform with a 2-sided network and is among a limited handful of mega-cap companies with its level of top-line compounding potential over the coming years, the near-term pressures, strategy change, and guidance reduction means PayPal shares will be largely dependent on signs of acceleration in Q2, Q3, and exiting the year.

Raymond James analyst John Davis downgraded to Market Perform from Outperform without a price target.

PayPal’s Q4 print included a 2022 outlook that will send estimates lower, and Davis believes the medium-term outlook laid out a year ago at the analyst day for a 20 percent revenue/22 percent EPS CAGR through 2025 is more than aspirational at this point.

He feels the stock is fully valued and is moving to the sidelines as he believes shares will be range-bound from here.

JMP Securities analyst David Scharf lowered the price target to $198 from $260 (50.8 percent upside) but kept an Outperform.

The results were below expectations on a user metric basis, specifically in “net new accounts,” as the company pivoted to focus on user engagement over absolute account growth.

Scharf adds, however, that he remains positive on the stock given its “most comprehensive” position in the two-sided digital payments ecosystem, its upcoming catalysts such as the Inc. checkout, and his view of headwinds being “transitory.”

Wedbush analyst Moshe Katri lowered the price target to $170 from $220 and kept an Outperform.

The analyst still believes the second half of 2022 year-over-year comps will benefit from the elimination of eBay Inc. from overall comps, more favorable comps, as well as possible cross-border travel recovery.

By Anusuya Lahiri

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