© Reuters PayPal (PYPL) stock gains 4% on upgrade to Buy, Truist sees M&A flexibility
By Senad Karaahmetovic
Shares of PayPal (NASDAQ:) are up almost 4% today after Truist Securities analysts upgraded to Buy from Hold.
The analysts also raised the price target to $95 per share, from the prior $75, implying an upside potential of over 30% relative to Friday’s closing price. While they acknowledge negative sentiment towards PayPal’s durable long-term organic revenue growth, they highlight “resurgent eCommerce”.
“Importantly, Street rev growth ests now mirror this view, vs last year when we were meaningfully below consensus. Although current macro challenges eCommerce vol/rev growth, we contend eComm will take share from card present,” they wrote in an upgrade note.
The analysts are now confident that revenue estimates are “reasonable” again. Moreover, they cite expected above-consensus EPS in 2023/2024, the M&A/buyback flexibility, potential new leadership, and a “record-deep NTM P/E discount to Mastercard (NYSE:)” as drivers behind the upgrade.
“A new CEO would be positioned to build on Mr. Schulman’s success, in our opinion, while also wielding a freer M&A hand, perhaps moving the co into card present acquiring, expanding its TAM and boosting terminal rev/EPS growth,” they added.
PayPal stock fell over 60% last year.
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