Early next month, PayPal (PYPL) will deliver 4Q21’s financials, and after lowering expectations last quarter, Deutsche Bank’s Bryan Keane expects the digital payments giant to deliver “steady growth.”
Boosted by ~24% year-over-year TPV growth, the analyst anticipates PYPL will generate revenue growth of ~12.9% and EPS of $1.12.
That said, Keane does not foresee any unexpected fireworks. “Given the latest quarterly trends in eComm, continued supply-chain issues, delta/omicron, and eBay headwinds, we see relatively limited upside again this quarter,” said the 5-star analyst.
Looking at PayPal’s monthly users trends, Keane’s expected results appear in the same ballpark as the quarter’s action. Unique Visitors (UVs) rose by 14% sequentially from 676.8 million to 769 million and came in 11% above the figure reported during the same period last year.
Looking ahead to 1Q22, similar to 4Q21, given the “more difficult comps” yet offset by “moderating eBay headwinds,” Keane thinks PayPal will “potentially” guide to cc revenue growth of ~12-14%.
That, however, “should mark the trough as growth rates steady and start to re-accelerate.” In fact, by 4Q22, Keane anticipates revenue growth will increase to 20% year-over-year with EPS potentially seeing out 2022 up by 25%. This is due to both easier comps and the addition of “modest incremental momentum” from the Super App.
In September, the company launched the first version of the Super App, which mixes services such as BNPL and crypto with “new products” including high-yield savings, in-app shopping tools, deals, rewards and bill pay. Over the coming months, the app’s features will be further enhanced with the introduction of additional investment capabilities, new online and in-store shopping processes, and “better PYPL branded capabilities.” The company also recently announced it is looking at potentially adding its own stablecoin.
So, interesting times ahead for PayPal, but what does it all mean for investors? Keane reiterated a Buy rating while sticking to a $260 price target. Investors are looking at 12-month returns of 36%, should the forecast work out as planned. (To watch Keane’s track record, click here)
Keane’s objective is virtually in-line with the Street’s average target, which currently stands at $260.94. Of the 33 analyst reviews posted during the past 3 months, 26 say Buy, 6 suggest to Hold, while 1 recommends to Sell, all culminating in a Strong Buy consensus rating. (See PayPal stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
