Investors have eagerly awaited PayPal Holdings Inc.’s latest report, hoping for concrete evidence to back up the company’s strategic vision. Despite a recent 20% increase in PayPal’s shares since their last report, Wall Street is looking for more than just talk.
Under Alex Chriss’s leadership as Chief Executive, PayPal aims to refocus on profitable growth. However, the honeymoon phase may be ending, as the underwhelming results of the company’s “innovation” event in late January caused shares to drop nearly 4%. Investors want to see tangible signs of progress.
Susquehanna analyst James Friedman emphasizes the need for pass completions and ball control, suggesting that while PayPal plays the long game, investors seek immediate results.
As the upcoming report approaches, uncertainty looms. Harshita Rawat from Bernstein believes there are too many variables at play. It remains uncertain whether PayPal will provide full-year guidance due to their new emphasis on profitable growth and the uncertainties surrounding their credit businesses.
Stay tuned for PayPal’s report to see if they meet Wall Street’s expectations and deliver the results investors are seeking.
Morgan Stanley’s Focus on Gross-Profit Growth Outlook
Morgan Stanley’s James Faucette is placing significant emphasis on the outlook for gross-profit growth at PayPal. According to Faucette and his team, the potential for a positive stock reaction lies in a “gross-profit surprise” that could push the stock towards their $66 price target.
Investors’ expectations for this year are centered around flat to slightly positive gross profit growth. However, Faucette believes that PayPal needs to accelerate the growth of branded checkout volumes and improve the economics of its unbranded Braintree checkout product in order to improve its current trends.
Faucette highlights a predominantly bearish sentiment towards PayPal, with concerns stemming from the belief that the company will struggle to achieve accelerated branded checkout growth or gain market share amid fierce competition.
In an attempt to address these concerns, PayPal’s management aims to change this downbeat perception through their upcoming report and commentary.
Read: PayPal’s latest layoffs could impact the stock market positively or negatively.
Barclays Analyst Eyes Potential Financial Impacts
Barclays analyst Ramsey El-Assal will closely watch PayPal’s management during the report to gain insight into the potential financial impacts of recently announced products showcased on innovation day.
El-Assal is also eager to see how the emphasis on profitable growth will affect PayPal’s financials. He predicts that although guidance for the full year may fall short of expectations in terms of top-line revenue, it will exceed predictions for margins.
Analysts tracked by FactSet estimate adjusted earnings per share of $1.36 for the fourth quarter, up from $1.24 the previous year, with revenue expected to reach $7.88 billion, compared to $7.38 billion previously.
The consensus forecasts for 2024 project adjusted EPS of $4.98 on revenue totaling $31.99 billion.
