PayPal Holdings (PYPL) jumped more than 4% in the pre-market session on Thursday after the digital payments company posted better-than-expected 1Q results. The rise in net new active accounts (NNAs), total payment volume (TPV), and strong revenues were the primary drivers.
Notably, after recording the strongest first-quarter results in its history, PayPal provided upbeat guidance for 2Q and FY2021.
PayPal reported 1Q adjusted earnings of $1.22 per share, up 84% year-over-year, and beat the Street’s estimates of $1.01. Adjusted net revenues grew 29% to $6.03 billion, topping analysts’ expectations of $5.9 billion.
TPV was $285 billion in 1Q, up 46% year-over-year, while the company added 14.5 million NNAs in the quarter. (See PayPal stock analysis on TipRanks)
For 2Q, the company projects revenues of $6.25 billion, higher than the consensus estimate of $6.16 billion. Moreover, its non-GAAP earnings guidance of $1.12 per share came in ahead of analysts’ expectations of $1.10.
For 2021, the company expects revenues and non-GAAP earnings to be $25.75 billion and $4.70 per share, respectively. Consensus estimates for revenues and earnings are pegged at $25.71 billion and $4.57 per share, respectively. Additionally, NNAs are expected to increase in the range of 52-55 million, while TPV to be up 30%.
Following the 1Q results, Needham analyst Mayank Tandon maintained a Hold rating on the stock.
Tandon commented, “We are encouraged by the strong results and outlook and are raising our estimates. However, with the shares trading up 4%+ after-hours and expected to open at an ex-cash P/E multiple of ~43x our FY22 estimate, we believe the risk-reward is neutral based on our expectations for PYPL to generate ~20% EPS growth over the MT.”
PayPal shares have exploded almost 93% over the past year, while the stock still scores a Strong Buy consensus rating based on 23 Buys versus 2 Holds. That’s alongside an average analyst price target of $319, which implies 28.9% upside potential to current levels.
PayPal scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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