PayPal maintains $78 target, post-Q1 earnings beat rating

On Tuesday, Keefe, Bruyette & Woods maintained its Outperform rating and $78.00 price target. PayPal Holdings Inc. (Nasdaq: ). The company made the decision after reviewing PayPal's first-quarter results, thereby adjusting the company's future profit forecast. Updated forecasts for 2024 and 2025 take into account higher expected revenue growth in fiscal 2024, but are moderated slightly by expected tax rate increases.

Currently, PayPal's revised 2024 earnings per share forecast is $4.06, up from the previous forecast of $4.02; its 2025 earnings per share forecast is $4.60, up from the previous forecast of $4.56. The adjustments reflect the company's more optimistic outlook on its revenue trajectory for the next fiscal year. Revenue growth appears to be an important factor in the company's forecast, despite adjusting for a higher tax rate.

In addition to the earnings revisions, the analyst's statement noted that the new estimates now also include the impact of stock-based compensation (SBC) burdens. This suggests that previous forecasts did not account for these charges, which are typically recognized as part of a company's compensation costs when employees are granted equity in the company.

Analysts at Keefe, Bruyette & Woods reiterated the company's confidence in PayPal's performance, saying: “We maintain our $78 price target. Maintain outperform.” The reiterated price target and rating indicate that the company believes that PayPal stock will continue to perform well. Perform well and have the potential to outperform the market or its industry.

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PayPal is a leading digital payments platform that has been on the radar of analysts in the growing fintech space. The company's stock performance and future earnings are closely watched by investors seeking to understand the growth potential of the digital payments industry.

Investment Professional Insights

Following Keefe, Bruyette & Woods' optimistic outlook, InvestingPro's live data further adds to the narrative about PayPal Holdings Inc. Confidence. Additionally, according to another InvestingPro Tip, PayPal currently trades at a price-to-earnings ratio of 17.75 times, making it an attractive entry point for investors given recent earnings growth.

InvestingPro pointed out that PayPal has a market value of US$71.95 billion and a price-to-earnings ratio of 0.2, making it an important player in the financial services industry. The company's revenue growth of 8.71% in the first quarter of 2023, coupled with a healthy gross margin of 39.59%, paints a picture of a company with solid financial fundamentals. The 29.32% price increase over the past six months further demonstrates investor optimism about PayPal's market trajectory.

For those looking to delve deeper into PayPal's potential, InvestingPro provides additional insights and metrics.Use coupon code PRONEWS24readers who subscribe to Pro and Pro+ every year or every two years can get an additional 10% discount and receive a total of 7 InvestingPro Tips to guide investment decisions in the digital payment field.

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