A Top-rated analyst David Scharf from JMP Securities is bullish on PayPal Holdings (NASDAQ:PYPL) stock. He raised the price target on PYPL to $70 (10.65% upside from the current level) from $68 and maintained a Buy rating. PYPL is a digital payment platform provider. Its solutions include PayPal, PayPal Credit, Braintree, Venmo, Xoom, and Paydiant products.
Before moving ahead, investors should note that TipRanks ranks the Top analysts according to industry, timeline, and benchmarks. The ranking reflects an analyst’s ability to deliver higher returns through recommendations.
Analyst’s Opinion
The analyst is optimistic about the company’s improving gross margin performance despite a shift away from the high-margin branded checkout business. Further, he believes that strength in some of PayPal’s top-performing businesses should help the company improve its top-line numbers.
Nevertheless, Scharf also highlighted certain challenges for 2024. These include the impact of credit normalization on revenue share arrangements and expectations of lower interest income due to potential interest rate cuts. However, he expects PYPL’s new product initiatives to outweigh these negative factors.
Is PYPL a Buy, Sell, or Hold?
Investors should note that PayPal is currently undervalued. Its forward price-to-earnings ratio of 17.4x is trading at a 66% discount from its five-year average of 50.37. This could represent a good entry point for investors.
On TipRanks, PayPal has a Moderate Buy consensus rating based on 16 Buy and 20 Hold recommendations. The analysts’ average price target on PYPL stock of $67.69 implies a 7% upside potential. Shares of the company have gained 13.4% over the past six months.
