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Thursday is going to be another bad day. PayPal (NASDAQ:PYPL), as the digital payments leader faces a share price decline of about 11%. PayPal suffered a decline in active accounts even though both revenue and profit exceeded expectations in its fourth quarter 2023 report. Additionally, the company’s guidance fell short of expectations, disappointing investors.
Revenue for the quarter rose 8.1% year over year to $8 billion, beating street estimates by $130 million. At the other end of the scale, adj. EPS was $1.48, beating analyst expectations by $0.12. There were other strong indicators as well. Total payment value (TPV) increased by 15% (FXN13%) to $409.8 billion, and the number of payment transactions per active account increased by 14% to 58.7.
However, on the downside, the total number of active accounts decreased from 435 million at the end of 2022 to 426 million. Looking ahead to 2024, the company expects adjusted EPS to be around $5.10, about the same as last year and below Wall Street’s expectations of $5.53. For the first quarter, PayPal expects his EPS growth to be in the mid-single digits. That number should reach $1.23, below the $1.26 consensus.
This is a transition period for PayPal, with new CEO Alex Chriss looking to re-accelerate the company’s growth. While investors may be disappointed with the way things are going so far, Goldman Sachs analyst Michael Ng believes the company is hitting the right notes, and the cautious outlook remains I think it might actually be a good thing.
The analyst said: “In our view, the quarter was relatively balanced, expectations for 2024E are conservative enough, and PYPL expects better operational discipline and new product contributions (guidance does not reflect this). “There is a possibility that this number will exceed this figure throughout the year,” he said. ). Also, PYPL’s new disclosures regarding TPV growth (PSP, Branded Checkout, Venmo, etc.), inclusion of SBC as an expense in adjusted results from Q1 2024, and an additional 50% through share buybacks in 2024E. We are also encouraged by our commitment to return $1 billion to our shareholders. ”
To summarize, Mr. Ng reiterated his Buy rating on PayPal stock, saying: We believe PYPL could perform well if e-commerce growth returns to its historical DD% growth rate. ”
The Buy rating comes with a price target of $74 (down from $80), implying a 32% upside in the stock over the next year. (Click here to see Ng’s track record)
Among Ng’s colleagues, PYPL bulls and conservatives are about evenly matched. The stock claims a Moderate Buy consensus rating, based on 12 Buys and 13 He Holds. At an average price target of $69.23, the stock could trade at a ~24% premium in a year’s time. (look PayPal stock price prediction)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. Content is for informational purposes only. It is very important to perform your own analysis before making any investment.
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