On Thursday, PayPal (NASDAQ:PYPL) experienced an approximately 11% decrease in its stock value. Although the company’s 4Q23 report showcased a significant rise in revenue and earnings, it also revealed a decline in active accounts. Additionally, PayPal’s guidance fell short of expectations, leading to disappointment among investors.
During the quarter, PayPal’s revenue increased by 8.1% year-over-year to $8 billion, surpassing the Street’s estimate by $130 million. On the other hand, the adjusted EPS of $1.48 exceeded analysts’ predictions by $0.12. Other notable performance indicators included a 15% total payment volume (TPV) increase to $409.8 billion and a 14% rise in payment transactions per active account to 58.7.
Despite these strong metrics, total active accounts decreased from 435 million to 426 million by the end of 2022. Looking forward to 2024, PayPal expects adjusted EPS of approximately $5.10, equivalent to the previous year and falling short of Wall Street’s projection of $5.53. For Q1, the company anticipates mid-single-digit EPS growth, with the figure landing at around $1.23, below the consensus of $1.26.
Goldman Sachs analyst Michael Ng believes that PayPal’s cautious outlook could ultimately yield positive results, considering the company’s efforts to re-accelerate its growth under new CEO Alex Chriss. Ng reiterated a Buy rating on PayPal shares and expressed confidence in the company’s consumer brand trust and ongoing investment in value-added features, as well as operational efficiency improvements that could lead to strong performance when e-commerce growth rebounds. He also highlighted its commitment to returning $5.0 billion to shareholders through repurchases in 2024.
Ng’s Buy rating is accompanied by a $74 price target (down from $80), indicating a potential 32% surge in share value over the next year. Among Ng’s peers, there is a near-even split between bullish and conservative sentiments, with 12 buys and 13 holds, resulting in a moderate buy consensus rating for PayPal stock. The $69.23 average price target suggests a ~24% premium a year from now.
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Disclaimer: The opinions communicated in this article belong solely to the featured analysts. The content is intended for informational purposes and should not be considered as investment advice. It is crucial to conduct personal research before making any investment decisions.
