© Reuters. PayPal (PYPL) Risk/Reward is Attractive – BofA
By Sam Boughedda
PayPal (NASDAQ:) CEO Dan Schulman spoke at an investor conference on Monday, indicating that the company is having a “good, solid” third quarter.
According to a BofA analyst, Schulman added that revenues are tracking in line with guidance of 12% constant-currency growth, and EPS is trending a bit ahead of guidance of $0.94-$0.96, which BofA believes should be positive for shares.
Following the comments, in a note to clients, the analyst maintained a Buy rating and a $114 price target on the stock.
He stated: “Quarterly execution against more prudent and conservative guidance, 2H22 top-line re-acceleration, and a 1Q23 Analyst Day (expected to feature updated medium-term capital deployment strategy) represent possible catalysts, while there remains significant room for investor sentiment to improve, and risk/reward (shares trading at 19.5x our above-Street ’23 EPS) is attractive.”
In addition, a Goldman Sachs analyst explained: “3Q EPS pacing better-than-expected (v. prior guidance) on better cost savings, while top-line in-line.”
“PYPL 3Q is pacing in-line on the top-line on both a spot (10%) & FX-neutral (12%) basis, while EPS is pacing better than its prior guidance of $0.94-$0.96. PYPL now expects at least $900 mn of gross savings in 2022 (vs. $900 mn prior) and at least $1.3 bn of cume gross savings in 2023 (unchanged),” he added. “Better-than-expected expense savings were driven by strong execution including (1) renegotiated contracts with vendors given PYPL’s larger volumes post-pandemic; (2) pullback in marketing spend; and (3) pullback on select lower return investments (e.g., stock trading platform, longtail geographies). Furthermore, PYPL reiterated its outlook for 4Q22 EBIT margin expansion, and now expects non-transaction opex to be flat or better (vs. flat prior).”
PayPal shares are down over 2% Tuesday.
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